If this option is checked and the grid is crossing the assembly in the project, then Smart Assemblies will create a 2D family to represent the grid in the assembly view.
Walls are crossed by grid lines in the model. This is a plan view of Level 1:
If we create an assembly with the Insert Grids option turned ON, then Dimension will also be turned ON in the Dimensioning Rules:
After the assembly has been created, you will get these results:
Front View - you can see the gridline 2D Family inserted with some available parameters and also the dimension line, in this case, from the grid to the wall.
You can modify the Grid Family and use this option with different Categories, like columns, beams, etc. Here is an example of a column in the plan view: