From my limited understanding of web trackers, tracking companies like Facebook & Google and other 3rd party trackers like to identify unique users on the internet so that they can be served targeted ads suited to that unique user’s traits. They do this by creating unique ‘Fingerprints’ for these users by taking note of their browser characteristics like Timezone, Screen resolution, Fonts, Language preferences, etc.

This setting simply resets this fingerprint daily so that these tracking companies are not able to track you on the basis of your browser attributes. if you turn this on it will increase your privacy but will break some websites.