This setting can be used to disable an item so that it does not react to any touch event. This is useful in particular to create static decoration objects: add a shortcut, hide its icon or label, set it as non clickable and you will get an element that can serve to build complex layout.
Since a non clickable item is really touch disabled, you need to enter the edit layout mode first in order to customize it again.
One limitation with this option is that it might not work well with widgets.