It does just what it says: causes Nero to not add the normal ;x file version to the end of the filename. The ISO 9660 specification requires that each filename include a ;x version number as the suffix. A full filename in ISO 9660 has three parts:
Presumably the version part was designed to allow multiple versions of the same file to coexist.
Anyway, most operating systems simply ignore the ISO file version and just display the normal name.extension part (at least Windows and Mac OS do, although on Mac OS you can view the version if you press and hold the option key while mounting the CD). Thus, you don't need to worry that if Nero includes the version number it will show up in Windows Explorer or the Mac's Finder, and you don't need a hack to permanently enable the "Do not add..." checkbox in Nero. In fact, it might be better to leave it as is since the OS expects the version number to be there so it can ignore it.