That's for using the captive portal where a guest has to log in on a web page before reaching the Internet. Typically this is a situation where the AP is configured to allow anyone to connect with no password, but guests can't use all resources without completing the web signup. Restriting from private IP ranges allows guests to only see the Internet, not parts of the LAN.
If you aren't using a portal instead restricting access to the wifi completely with WPA2, that setting does not apply.