I have just started creating azure functions. I am creating a new azure function and got the below option. what does it mean? what if I select or unselect it? I have not found any documentation about it.

It shows this info, but I didn't understand it at all.

When you create an Azure Function, there needs to be an Azure Storage Account behind it, for various runtime needs (https://learn.microsoft.com/en-us/azure/azure-functions/functions-app-settings#azurewebjobsstorage).
For local development, you can choose to either use a real Azure Storage Account in the cloud by setting AzureWebJobsStorage app setting to that storage account's connection string, or you can use a local emulator (Azurite) that simulates a Storage Account on your machine.
So if you select that Azurite box, it will set AzureWebJobsStorage to use your local emulator instead, therefore no need for a storage account in the cloud.
https://learn.microsoft.com/en-us/azure/storage/common/storage-use-azurite?tabs=visual-studio
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