What "disable IP sharing" do?

What do “disable IP sharing” do, and is it safe to use with strangers?
In other words, how? When we connect to another’s device, dont we connect to the others device/peer by IP adress?

I have had a friend say that it shares a different IP, non-leaking(?) IP address


(Thought this was the best place to ask, give feedback if there is something more preferred)