The "Use division for members with nodes lying on them" option internally divides a member at the member locations where nodes lie.
The structure in Image 01 includes two members: Member S1 from Node 1 to Node 2, and Member S2 from Node 3 to Node 4.
If you select the "Use division for members with nodes lying on them" option, Member S1 will be divided internally at Node 4. Thus, Member S1 is connected to Member S2, which is also visible on the deformation (Image 02).
If you deactivate the "Use division for members with nodes lying on them" option, Member S1 will not be divided at Node 4. Thus, Member S1 is not connected to Member S2. Image 03 shows the deformation in this case.
The structure in Image 04 includes Member S1 from Node 1 to Node 2. On the member is Node 3, to which a nodal load PZ = 50 kN is applied. The nodal load is only applied to Member S1 when the "Use division for members with nodes lying on them" option is selected (Image 05). If you deactivate the "Use division for members with nodes lying on them" option, Member S1 will not be divided at Node 4.