This option tells smbd never to scan for case-insensitive versions of names. So if an application asks for a file called FOO, and it cannot be found by a simple stat call, then smbd will return file not found immediately without scanning the containing directory for a version of a different case. The other xxx case xxx lines make this work by forcing a consistent case on all files created by smbd.
Remember, all files and directories under the path directory must be in uppercase with this stanza because smbd will not be able to find lowercase filenames with these settings. Also note that this is done on a per-share basis, allowing this parameter to be set only for a share servicing an application with this problematic behavior (using large numbers of entries in a directory) the rest of your smbd shares don't need to be affected.