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This setting is found in the Wood structural panels and fiberboard data group, meaning it applies only to those shear walls that have wood panels or fiberboard on at least one side. If it is selected, then the program considers full-height segments with a height-to-width ratio between 2 and 3.5 for wood panels, and between 1 and 3.5 for fiberboard, as shear resisting elements.
If you allow these segments to be shear-resisting, then for wood structural panels using capacity-based force distribution, SDPWS 4.3.4 calls for a shear strength reduction factor of 2b/h. Using deflection-based resistance, SDPWS 4.3.3.4.1 mandates a reduction of 1.25 - 0.125 h/b. For fiberboard, these reductions are 0.1 + 0.9b and 1.09 - .09 h/b, respectively. The design shear resistance is reduced by this factor, which is reported in the Shear Results table of the Design Results. (b is segment width and h is shear wall height).
If you allow these segments, they contribute to the shear resistance of the shear line, drawing shear force and reducing the force on other segments on the line. However, the reduction in capacity may render these segments the critical ones on the line. You might choose to disallow the contribution of these segments if the critical shear strength reduction is greater than the effect of the segment's contribution to shear resistance.
When this setting is unchecked, then the Ignore contribution of.. setting for non-wood panels when combined with wood is unchecked and disabled, as in this case there is no advantage to ignoring the non-wood-panel contribution in terms of avoiding the penalty for a height-to-width ration between 2 and 3.5.