I think it is a little confusing that the description of the site setting is the same as the one for the user setting.
Maybe “Notify users about topics in categories or tags they are watching that also belong to one they have muted” would help to distinguish the site setting. You could also add something like “by default” or “Users can change this in their preferences” as they are used at other User Preferences settings. By the way, I would have expected the setting to be in this category, but it is in “Tags”.