A check mark in this field indicates that when handling an outbound unit of the item in question, you must always specify which existing lot number to handle. This means that when selling a unit of the item, it must be applied against a specific lot number in inventory. Or in other words, a lot number assigned to the item when entering into inventory must follow that item type out of inventory.
As this particular setup field covers all possible transactions with the item, the individual inbound/outbound fields will also be checkmarked. However, the individual inbound/outbound fields have nothing to do with application across inventory - they merely define a company's work flow concerning when to assign item tracking numbers.