Well, I finally looked it up today and it has a VERY useful purpose! As you know, in KNK Studio, you can create an outline (shadow mat) using Tranform>Outline. Up on the Smart Bar, you will find an icon on the far right which you can indent for masking or outdent to leave off. Masking, in essence, is used for creating a single welding outline when there is more than one image selected. With the Masking off, the outlines will remain individual. That’s it!
Lynn G reported another related discovery this morning: if you initially have only selected one object for the Transform>Outline but then click on other images, the outline will be applied to each one.
Here’s a question I get at least twice a week: How do I tell if my PDF file is raster or vector after I import it into Klic-N-Kut Studio?
Answer: Great question!
And here are some general guidelines I use to figure it out:
(1) Select the image and go to: Arrange>Break Path. If it’s grayed out, then you definitely don’t have a pure vector image. It’s either raster or a hybrid.
(2) If you double click and it brings up the Accuscan window, then another good sign it’s a raster. Go ahead and try tracing it.
(3) If you double click and see nodes, you pop open a bottle of champagne… it’s a vector pdf! lol
(4) If you double click and it brings up the Group Viewer, then you go to Layout>Ungroup. Click away so that nothing is selected and start over. If you STILL get the Group Viewer, then it’s a hybrid and dealing with those is going to take a video or two! Which I promise to make and they will be free due to the source of the samples I’ll be using 
