SongKong usually groups songs by folder and assumes that one folder represents one album or single, although it does clever things to identify multi-disc releases that may store songs in one folder per disc. Then if the Only allow match if all songs in grouping match to one album is enabled SongKong will not allow a match unless all songs in the folder have been matched to one album. But many of us may have some folders just containing a collection of essentially random songs and if SongKong identifies such a folder and was not able to match all the songs to one album it will then allow individual song matching for songs in such a folder. Some of you may store all your songs in a single folder, or one folder per artist and SongKong can also detect all these situations.
But if you know that every folder already represents an album you can enable this option to prevent SongKong from detecting non-album folders. Doing so ensures that SongKong cannot possibly break up songs in any folders because all songs in folder need to match to the same release.