This menu option changes the display of binary attribute values, or values which data type is Octet String or another hexadecimal format:
As you can see in the screenshot, LEX tries to show binary data as ASCII characters, this is because many directory servers store text data in binary attributes. If you want to see the real binary data in hexadecimal output, you can use this option.
You could change the binary attribute name display also with the the Show hex output for hex values button .
Please note that this settings affects the display of binary attributes not only in the object list, but also in the attribute list - or in attribute windows which are opened after the configuration is done.