With this option enabled, a drive scan reads/adds all 1st levels directories to the tree. It then scans each of these for subdirectories. If a subdirectory is found, it adds ONLY that subdirectory (which will add the '+') and moves on to checking the next 1st level directory. This results in the absolute minimum skeletal tree and the fastest possible tree building. With this option not enabled, it it adds all second level directories to all 1st level directories.
If there is a current directory for the drive, that first level directory is read down to the level necessary to find the current directory.
If Read All Dirs is checked in the Drives menu, it reads all directories into the tree regardless of this option state.