Optional Boolean. The value of this attribute determines whether the content type inherits fields from its parent content ...

Optional Boolean. The value of this attribute determines whether the content type inherits fields from its parent content type when it is created.
If Inherits is TRUE, the child content type inherits all fields that are in the parent, including fields that users have added.
If Inherits is FALSE or absent and the parent content type is a built-in type, the child content type inherits only the fields that were in the parent content type when SharePoint Foundation was installed. The child content type does not have any fields that users have added to the parent content type.
If Inherits is FALSE or absent and the parent content type was provisioned by a sandboxed solution, the child does not inherit any fields from the parent.