When it's off, it uses keypresses to check if the soul is moving or not. So, even if you're pressing opposing keys or runnig into a wall, orange bones won't damage you and blue ones will.
When it's on, it checks for position, so orange bones will only damage you if you're visually moving, though that means that if you're in a platform, even whilst not pressing any keys, you'll still take damage from blue bones.
Btw, "acc" means "accurate."