This setting lets multiple users use the Office 365 ProPlus, Office 2019, or Office 2016 desktop apps to simultaneously edit an Office file stored in OneDrive. It also lets users share files from the Office desktop apps.
If you enable this setting, coauthoring and sharing in the Office desktop apps is enabled. Users can disable these features by opening the OneDrive sync app settings, clicking the Office tab, and clearing the "Use Office applications to sync Office files that I open" check box.
If you disable this setting, coauthoring and sharing in the Office desktop apps is disabled, and the Office tab is hidden in sync app. The "Office file conflicts" setting will also be disabled and when two versions of a file conflict, both copies will be kept.