When you select this option, WSA will not attempt to calculate space required for user data. When the WSA Actions - Initialize step runs in the task sequence, a variable named 1ESkipUserStateCapture will be created and set to true. If the task sequence includes steps to capture data, these should be conditioned to only execute if 1ESkipUserStateCapture is not true.
Specifically for a Replace Capture WSA application, if you select this option, Migrate Applications will be enforced on the Applications page. This is by design - the Replace Capture application only migrates data and applications. If data migration is not required, application migration is the only thing that WSA will be doing.