This setting specifies what happens when there's a conflict between Office file versions during sync. By default, users can decide if they want to merge changes or keep both copies. Users can also change settings in the OneDrive sync app to always keep both copies. (This option is available for Office 2016 or later only. With earlier versions of Office, both copies are always kept.)
If you enable this setting or do not configure this setting, users can decide if they want to merge changes or keep both copies. Users can also select in OneDrive sync app settings to keep both copies.
If you disable this setting, both copies of the file will be kept when versions of a file conflict. Users won't be able to change the setting and merge changes.