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 . You could also switch the display for a single binary attribute row with the context menu (right mouse click) and the option Show Data as Hex Values / Show Data as ASCII String.
Please note that this settings affects the display of binary attributes not only in the attribute list , but also in the object list - or in attribute windows which are opened after the configuration is done.