If you check this box, only the first letter will be written if the letter is found in several places in the word. Then you have to rechoose the same letter, to replace the second instance in the word until there are no more instances of this letter.
For example, the word to guess is "potato". If this option is unchecked, when you try "o", the two instances of "o" in the word will be discovered at the same time. If this is checked, you will need to try "o" twice.
Default is that for one letter typed, all instances of that letter in the word are discovered.