It makes your bullets hit on your aim point at the selected distance, then at that distance you don't have to bother with ballistics. It is the same distance and your convergence in this game. So if you set it at 300 meters you know exactly where your bullets hit, if you turn it off your bullets impact below your cross hair due to ballistics.
Actually that is not completly true
The bullets will fly straight ahead for like 400 meters and then will drop. If you are a short range brawling dogfighter then you might wanna consider turning it off. And if you are good with ballistics, long range is no problem
If you are more for long range fighting at a fixed range (lets say 700) then by all means, leave vertical targeting ON
This is with vertical targeting ON