The Automatically Mark Transaction as Cleared setting in the Toolkit does just what it says — if you manually enter a transaction, it will automatically be marked as Cleared when you save it.
This setting differs from the new Clear New Transactions with CTRL+Enter setting in that this option automatically marks all new transactions as cleared while the other allows you to determine on an individual basis whether or not to immediately mark a new transaction as cleared or not.
The usefulness of this setting depends on how you tend to use YNAB. I favor the original philosophy that manual entry of transactions at the the time of purchase adds a great deal of value to the entire YNAB experience and aids in maintaining the intentionality of conscious spending. So in my case, I definitely don’t want manually entered transactions to be automatically cleared — it’s likely that my spending won’t clear my bank or credit card account for at least another day, often more. Clearing is part of the reconciling process, not the spending process.
The one exception to this is, of course, cash spending. Cash spending is instantaneous so it “clears” at the same time that it occurs. That’s why the Cash type of Account is programmed to automatically clear all new transactions upon entry.