This policy setting determines if changes made to a server document should be automatically merged with the locally-cached ...

This policy setting determines if changes made to a server document should be automatically merged with the locally-cached copy of the document on the next save. This policy pertains to the co-authoring experience in Word.

If you enable this policy setting, then changes made to a server document will not be automatically merged with the locally-cached copy of the document on the next save. 

If you disable or do not configure this policy setting, then changes made to a server document will be automatically merged with the locally-cached copy of the document on the next save.