By default, Jarbas won't let you sell a product that has run out. If you work to order, make things on demand or deliver later, you can allow the sale even with zero stock.
The switch's caption sums it up: "If yes, the product can be sold even if it's out of stock."
It only exists when the product's Stock Control is on — with no stock control there's nothing to block.
It also doesn't appear on services or combos, and changing it requires the stock permission.
With the switch off (the default), trying to add a product with no balance gets you "Insufficient stock for (product)" and you can't continue. When confirming the order, the warning is "The product (name) does not have enough stock to confirm the order."
With the switch on, the sale goes through and stock goes negative — say, −3. That negative number is your to-do list: three units you've already sold and still need to restock.
Each product has its own switch. Turn it on only for the items you genuinely sell to order, and leave it off elsewhere — that way Jarbas keeps protecting you from selling what you don't have.
When stock goes negative, Jarbas has no purchase entry telling it what those units cost. When you restock, check that the product's cost price is right, otherwise the profit on those sales comes out distorted.