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The IP Anonymization feature allows you to exclude the IP address of the visitor from Gooogle Analytics.
Click here to learn more: https://support.google.com/analytics/answer/2763052?hl=en
When you check this box, the plugin will add the anonymize ip tag to the Google Analytics code snippet.
If you select not to include the GA code snippet, you will have to add this flag manually or use a similar feature in the third party plugin.