This policy setting controls the "Use smart paragraph selection" option found under File tab | Options | Advanced | Editing ...

This policy setting controls the "Use smart paragraph selection" option found under File tab | Options | Advanced | Editing options.

If you enable or do not configure this policy setting, Word will automatically select the paragraph mark at the end of a selected range of text.

If you disable this policy setting, Word will not automatically select the paragraph mark at the end of a selected range of text.  However, a user can still select the paragraph mark manually.