It combines the ssid's from all 3 wireless networks into one and lets the router choose which band is best for your device based on bandwidth and distance from router.
Option 2 is you can leave them seperate. You have to manually choose which ssid to select for your device.
2.4ghz band has further distance but slower speeds. 5ghz has much higher bandwidth but can't transmit as far or through as much stuff.
Some people prefer option 2 because it allows them to do the choosing and load balancing. The reason I'd recommend option 1 is its set and forget. When it first came out, it wasn't the best feature but optimizing has made it much better. The less technical in my family prefer it just because it works for everything they do. I can notice a difference but its because I'm regularly testing it.
