This setting allows you to focus your defense on a particular area of the floor, such as tightly guarding the perimeter or packing the lane. Each has it's pros and cons. If you focus too much on the outside, you'll give their outside shooters fits and you'll probably be called for less fouls, but their low post players will have an easier time inside as will players that drive to the hole. You'll also be out of position for many rebounds.
On the other hand, if you focus on stopping the inside game, you'll give a good passing team many open outside shots, but you'll have more players in position to rebound.