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It's been a bit on the office side for me. if I can remember correctly, it allows the office token to roam with the user via 1 and 0, I believe, leaves it on the machine they are on or it did. But then there is another option to specify the cache location to store it, too. It's been a while since I had to deal with office or 0365 myself. But I have to look it up to verify, I. I don't want to give bad advice also. Others will have some advice too. @c4rm0 is another good one to ask.

Yeah it's used when you use shared computer activation for O365 apps and allows roaming of the license token. If you use fslogix and use the setting include office activation data in container you don't need to set the sclcache settings https://learn.microsoft.com/en-us/deployoffice/overview-shared-computer-activation#additional-details-about-shared-computer-activation-for-microsoft-365-apps

@c4rm0 thanks man, for the extra information here.