I also want to know the relevance of this setting
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That's not an 'out-of-the-box' parameter in FME, but rather a user built parameter. Without seeing the workspace itself, we won't know how it is being used. You can right-click any of the user parameters and show the references. That may clue you in to what it's being used for. Alternatively, if you upload a copy of the workspace here we can take a look.