That's a great question. I haven't been able to find any documentation. Mind telling me where you went to bring up that option?
Someone from my team just sent me the same question -- I have no idea what the option signifies, but have seen it when setting up a group before.
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Seems someone on Tableau's Training Team was able to provide an answer -- in their words:
"That will expand the node within a group dimension if you drag a new dimension member to the node or select the member and use the “Add to” dropdown at the top of the edit group menu. The easiest way to see this is to create a group using the edit menu, add a single dimension member as a grouped element, click the triangle on the node to collapse it, then add anything else to that node.
If you deselect the “Show Add Location” checkbox then the individual nodes in the group won’t expand to show all members in the node when you add a new member. If the checkbox is selected then the node will expand. You won’t see this difference unless you first collapse the nodes in the group.
It’s super handy if you’re creating a group off a dimension with a ton of unique members and a lot of nodes. Having the nodes expand every time you add a member to them creates a bit of a hassle in that situation, so adding members to the node without expanding anything streamlines the workflow a bit."
I hope this helps -- cheers!