When selected, any records shared with users in this group are also shared with users higher in the role hierarchy.

Grant Access Using Hierarchies for public group Determine whether users have access to records they don’t own, including records to which they don’t have sharing access, but someone below them in the hierarchy does.

Note:

If a user is added to the public group. All the users above his role hierarchy will all also be added to the public group with Reason For Membership as “Manager of Group Member”.