Hi,
It does pretty much what it says: it request from TIDAL a FLAC 44.1 kHz / 16- bit (and no more, so no 24-bit).
If such FLAC exists, this is what will be played (a 44.1 kHz / 16- bit FLAC).
If FLAC is not available, which is very rare but possible for some very obscure albums, the request will end up with
a AAC stream in either 320 kbps or 96 kbps bitrate. That's why the label is called "TIDAL maximum audio quality".
Likewise, if you set that setting to ''FLAC 192 kHz / 24-bit', this is the maximum quality you will get if available, but if that quality is not available you will get something lower.