What is it you do not understand about the help? It is pretty clear. I have not tested it but I understand the concept by reading F1.
As an example test this - Buy 100 of an item. Sell 20 so the remaining quantity of the ILE is 80. Create a return order, select the option and DO NOT tick the return original quantity. Then do it again, but tick it. Notice the difference which therefore explains what it does!