When this option is enabled, the contents of the terminal screen will be pushed into the scrollback when a server-side application clears the screen, so that your scrollback will contain a better record of what was on your screen in the past.
If the application switches to the alternate screen (see section 4.6.4 for more about this), then the contents of the primary screen will be visible in the scrollback until the application switches back again.
This option is enabled by default.