This policy setting controls Event Log behavior when the log file reaches its maximum size. If you enable this policy setting ...

This policy setting controls Event Log behavior when the log file reaches its maximum size.

If you enable this policy setting and a log file reaches its maximum size, new events are not written to the log and are lost.

If you disable or do not configure this policy setting and a log file reaches its maximum size, new events overwrite old events.

Note: Old events may or may not be retained according to the "Backup log automatically when full" policy setting.