It does, but turning it on means that some existing users could have duplicate usernames. If they try to change their username, the new username will be checked with the directory. So you’ll end up with a site that has some users with globally unique usernames, and some don’t. When this setting is enabled, we need to check existing users and register them if they are unique, or do something with the usernames that aren’t unique (generate a new username for them and allow them to change it).