If this setting is enabled then the user will not be able to select the OU that a query will search when they run it and queries will always use the default search location that has been specified (either via Group Policy or by the user in the Options window). If no default search location has been specified then queries will always search the entire domain. If a default search location has been set then all queries will search that location and the user will not be able to change this (this also applies to the Include Sub Containers option). NOTE: Unless the default search location has been specified via Group Policy then there is nothing stopping the user changing the default search location in the Options window, so this policy is only really useful when used in conjunction with the Default Search Location policy.
If this setting is disabled or not configured then the user can choose the container that a query will search when they run it.