Basically, you need to have this set appropriately for each section layout you have assigned. They form a cascading series:
the first option “Do not change” keeps the indent in all circumstances;
the second option removes the first line indent in the first paragraph in each binder document with that layout assigned;
the third option removes the first line indent in the first paragraph and after any blank line (e.g. as a scene break) in each binder document with that layout assigned;
the fourth option removes the first line indent in the first paragraph, after any blank line, and after any paragraph with a style (such as a heading or block quote) in each binder document with that layout assigned.