This flag is used when the value (Within VDT) is not annualized and is required to be annualized to realize the full benefit or Idea Value. Taking into consideration the Idea's Benefit Duration.

Here is an example below:

An Idea with an Annualised Benefit value of 12 000 000 and Benefits Start date 01-01-2020 and End date 31-12-2021. Will have its monthly benefits displayed under the Benefits Tab calculated as follows: 

The total benefit days is the number of days between the start and the end date, which on the above is: 731 days (2(years)*365/6(days in a year)) since the benefit is configured to be distributed over 2 years.

All Monthly Benefits will be calculated as (Annualized benefit / total benefit days * days in the month) e.g. March 2020  = (12 000 000/731*31) = 508 891,928

When the Annualised Benefit flag is turned ON, all Monthly Benefits will be calculated as (Annualized benefit / total benefit days * days in the month). The total benefit days will be 365/6 days since the Idea is configured to distribute benefits over a year regardless of the end date. e.g March 2020 = (12 000 000/365*31) = 1 019 178,082

See this article for additional context. What is the difference between the Idea Benefit Calculation and Cumulative Benefits report?