Here you choose between using the capacity of the shear wall or the design shear force when determining the forces used for hold-downs and drag strut design.
Note that the forces used to calculate hold-down deflections are always based on applied force rather than shear wall capacity, regardless of this setting.
Although SDPWS 4.3.6.4.1 clearly indicates the use of shea force, the shear wall capacity option is included because some seismic designers believe that the lateral-force resisting system should be designed such that the ultimate capacity of the hold-down equals or exceeds the ultimate capacity of the shear wall rather than the induced shear.