Color has top priority (User Flags=>Color has top priority)
When a user flag is set you can configure GSAK to display that row in a particular color (see Tools=>Options=>General). You can also set a row color via Waypoint=>color. The problem, then comes about when you have set a row color and the user flag at the same time - which color should the row display.
This option allows you to toggle the priority of the user flag color. That is, when selected, the user flag color will be shown and when not selected the color set via Waypoint=>Color (or using the SetColor in the macro language) will be shown.