When a Group's members includes users and groups (nested Groups),
Managed File Transfer
will include the users who belong to the nested group. When this setting is not enabled, users that belong to the nested groups will not be included.
For example:
The Software Development group membership contains individual users (software developers) as well as the QA group. When Include Nested Groups is enabled, the users that belong to the QA group will also be included. If Include Nested Groups is not enabled, users that belong to the QA group will not be included.