When this icon is selected, the data created will be compatible to PostScript Level 1. PostScript Level 1 is the simpliest (and oldest) language variant of PostScript and does not support many enhanced features like CMYK colours or more precise positioning.
We recommend basically that you use at least Level 2 format output to avoid colour and positioning problems. But as not all PostScript interpreters are Level 2 compatible (e.g. Calipso v1.x), you can switch off this option here.