Hello EnterpriseArchitect,
Thanks for your question.
The primary purpose of this setting is to create collaboration and access management across different organizations. It is useful for scenarios where you need to manage access for users from other organizations, like subsidiaries, partners, or head offices.
Away from the above, the implication of doing this is External users can request and receive access to resources in your organization based on your predefined policies.
The details of doing this are properly documented here:
https://learn.microsoft.com/en-us/entra/id-governance/entitlement-management-organization
Regards,
You can mark it 'Accept Answer' if this helped.