This policy setting allows you to enable the encryption of removable media and disable the user's ability to change this ...

This policy setting allows you to enable the encryption of removable media and disable the user's ability to change this setting.  If you enable this policy, then any new files created on the storage card will be encrypted with a key tied to the device, and the user cannot disable this setting. Note that if a cold reset is performed on the device then the files are not recoverable.  If you disable this policy, then the user decides whether to encrypt files put on the storage card.  If you do not configure this policy, then existing device-specific policies for storage card encryption are applied.
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