Look it up in the manual:
Adjusts the tradeoff between rendering quality and memory use when resizing images to smaller than their original size (downscaling). The options are:
High quality: mipmaps are enabled and the spritesheet after export pads out all images to power-of-two sizes. This can significantly increase memory use, but can resolve two minor rendering issues: light fringing that can sometimes occur along the borders of downscaled objects, or a quality change in the last frame of an animation. Do not use this mode unless a rendering artefact is specifically observed and selecting this mode can be observed to resolve it: the increased memory usage can be very significant, and is not a cost that should be added for no reason.
If you just go blindly changing options without understanding what they do, then you will end up confused like this. Since a lot of people seem to make this mistake with this option, the next build warns you when choosing 'high quality' downscaling mode.