That box might better be thought of as "participates -be it either passively or actively- in indirect light calculations".

     Hair would participate in IDL by passively reflectling/diffusing a fraction of the light hitting it.  Pixie dust would participate by actively casting light.

     The default is rightly that everything participates in IDL calculations.  The only exceptions would be for certain items with unusual properties (a background billboard, e.g.), or disabling transmapped hair IDL participation in order to save on system resources for marginal computers.

Poser 12, in feet.  

OSes:  Win7Prox64, Win7Ultx64

Silo Pro 2.5.6 64bit, Vue Infinite 2014.7, Genetica 4.0 Studio, UV Mapper Pro, UV Layout Pro, PhotoImpact X3, GIF Animator 5