This setting allows you to indicate whether you'd like to focus your defensive unit on the Perimeter, on the Inside, or somewhere in between.
The positioning setting will impact your own team's defensive rebounding (the further away from the basket, the harder to rebound). It will impact your opponent's turnover and foul chances slightly, frequency of 3pt shots vs. 2pt shots, and of course both 2pt FG% and 3pt FG%. How much of an impact depends on the setting and the Offensive Range designation of the offensive player that has the ball.
NOTE: This setting is opponent specific, so if you set it for a particular opponent, the system will remember it for any future matchups with that team. If you do not set it for a particular opponent, your positioning will be Balanced.