Parallax can be adjustable or fixed and parallax setting tells you if parallax is fixed, on which distance.
Adjustable parallax setting allows you to line up your reticle with your target object in a proper plane, what brings you a proper focus, better sight image, and better accuracy.
Easy explanation about parallax meaning. When your rifle with rifle scope is fixed on a bench and you are looking through the rifle scope. Your reticle is perfectly in line with the center of the target. Now you move your head around and you see also the reticle moves a little bit in relation to the target. This is parallax error. It happens when the target is not perfectly focused. When you adjust the parallax, so that the target is in perfect focus, then there is no parallax error. You can move your eye from the optical axis and the reticle will still stay in line with the center.
Traditionally, rifle scopes had a fixed parallax set at 100 meters or 100 yards; however, with the advance of shooting sports, such an approach was not adequate anymore. Scopes with fixed parallax offered the best resolution only at one distance (100 meters/yards) at which the target was in focus. At all other distances, the picture was less sharp or even blurry. An even bigger problem with this type of scope was the fact that, when shooting at the target not at the same distance as the scope parallax setting, the shooter had to be very careful about his eye alignment with the optical axis. If the eye is moved away from the optical axis, the reticle on the target will move, which will worsen the accuracy. Since these errors are small, the fixed parallax option is still considered accurate enough for traditional hunting. For sports shooting, though, such a small error leads to poor results. Parallax errors become more pronounced with magnifications higher than 12x, and that means the majority of scopes with magnification range under this value need no parallax adjustment.
With the ability of parallax adjustment, the accuracy of the riflescope is greatly enhanced at all distances. The shooter, however, has to adjust the parallax setting before making the first shot. Such scopes usually have AO – Adjustable Objective or SF – Side focus acronym in their name.
Source: Revija Lovec