It basically determines if the scanner will treat talkgroups with a status bit set as different talkgroups than the base talkgroup. In ignore mode, the scanner will ignore any status bits (except the encrypted bit, which the scanner will act on and not switch to the voice channel) that may be in use on that talkgroup.
In Use mode, a talkgroup with a status bit set (i.e. multi-select) will be treated as a completely different talkgroup from the base. More information about status bits and their meanings may be found in the WIKI.
I use status bits on my local Motorola system to hear priority talkgroup activity -- for example, the standard (ignore status bits) ignores the bits that are not part of the base talkgroup id -- but talkgroup ID + 2 is the talkgroup ID when the user hits the emergency button on the radio (base is 16 and the emergency is 18); +7 gives me priority police dispatches (base is 17392 and the priority "patch"/multi-select? is 17399).
I have the emergency and priority ids (with status bits enabled) in a separate scanlist so I don't have the listen to the police chat all day -- I just hear when something other than "routine" becomes active and if interested, I then enable the base talkgroup to hear the rest of the action -- and when over I go back into "priority and emergency mode only"