This policy setting allows you to restrict the installation of unsigned gadgets. Desktop gadgets can be deployed as compressed ...

This policy setting allows you to restrict the installation of unsigned gadgets.  Desktop gadgets can be deployed as compressed  files, either digitally signed or unsigned.
If you enable this setting, gadgets that have not been digitally signed will not be extracted.

If you disable or do not configure this setting, both signed and unsigned gadgets will be extracted.
The default is for Windows to extract both signed and unsigned gadgets.