Interesting, I never knew this setting was even available. But - it doesn't seem to make any difference. I've just tested it again with this setting both ticked and unticked and it doesn't make a difference.
If I update a track in my DAW and change the bitrate (e.g. from 128 kbps to 320 kbps) then during the next sync it DOES correctly upload the new 320 kbps to my device and overwrites the old one.
But if I do something like change the volume level of a track (as an extreme example, make the whole track silent but keep the same bitrate) then during the next sync it DOESN'T correctly upload the modified mp3 track.
In the track properties it does show the timestamp has changed to when I rescanned the now-silent mp3 but it won't resync the new version unless I do something like change the bitrate (I saw that changing the track length also triggers a sync of the edited version).
So changing the bitrate or duration of a track will definitely cause an edited track to update during a sync. But if I do something like change volume levels or EQ of a track then it won't update the new version onto my device. This is a bit of a problem for me as I need to know the tracks on my device are exactly the same as on my PC. The only workaround I can see is if I edit a track I'll need to delete it from my device and it should then appear again on the next sync.