Scientific pitch notation specifies musical pitches by combining a musical note name (pitch class) (with an accidental if necessary) with a number that indicates the pitch’s octave.
The octave setting sets the starting octave (number) that a chord will be generated from. Specifically, it sets the root of that chord to a particular octave number, as other chord tones may extend into the octave above.
This feature is ignored while voice lead is on.