This policy setting sets the "Alert before overwriting cells" option found under File tab | Options | Advanced | Editing ...

This policy setting sets the "Alert before overwriting cells" option found under File tab | Options | Advanced | Editing Options.

If you enable or do not configure this policy setting, Excel will give a warning if cells are about to be overwritten.  This is the default behavior.

If you disable this policy setting, Excel will suppress the warning that cells are about to be overwritten.