Some third-party apps and versions of Office prior to Office 2013
don't use modern authentication and can't enforce device-based
restrictions. This means they allow users to bypass conditional access
policies that you configure in Azure.
So if you want to block access from apps that don't use modern authentication then you should set it to on. Else leave it as it as.
Reference - Control access based on network location or app
If you want to enable/disable it, you need Global admin or atleast Onedrive admin permission.
After that, you can go to Onedrive admin center at below url:
Here you can turn the setting on/off as per your policy. After that click on Save and wait for some time for the changes to get propagated.