This setting allows you to choose between using the 3-term SDPWS deflection equation 4.3-1 and the non-linear 4-term equation C4.3.4-1.
The 3-term equation is a linearization of the 4-term equation, arrived at by combining the shear and nail slip equations in the 4-term equation using an "apparent" shear stiffness Ga. The linearization is achieved by setting the non-linear occurrences of shear force v in the 4-term equation to the shear capacity of the shear wall to render this value constant. It is therefore identical to the 4-term equation when the shear wall is at capacity, conservative when below capacity, and non-conservative for shear walls that are overstressed for design anyway. SDPWS Figure C4.3.4 shows this in graphical form.
The four-term equation is implemented in Shearwalls because it is more accurate, and because the SDPWS does not publish Ga values for serviceablity wind loads (although we compute a Ga in this case). However, the process of equalizing deflections on the shear-resisting elements by adjusting the forces apportioned to each element converges more rapidly for the linear 3-term equation than the non-linear 4-term equation. Also, some users are more comfortable using the 3-term equation because it is in the main body of the SDPWS, whereas the 4-term equation is in the Commentary.