According to my understanding:
The username provided via SSO is now considered a suggested default. Users can change it if they want. It is also modified if the username is already taken: In this case, the new user does not get the username from the SSO payload but an automatically generated alternative. (In theory, this can also happen with this setting enabled, e.g. if you have multiple similar usernames with characters not allowed in Discourse usernames.)
This should not affect anything else, as all matching between the SSO payload and Discourse users is leveraging the external ID or mail if needed.