This is commonly used by Remote Desktop users and is equivalent to what you would have with Microsoft Terminal Services.
It can be useful to check this box if you plan on using exotic printers such as receipt printers.
Most of the time it will require that you install the same version of printer drivers on client side and on server in order to work properly.
This means that if your server is a Windows 2008 64 bits and your client computers are installed with Windows XP 32 bits, you will need to install the 32 bits XP Printer Drivers on the server.
Click on the Start Menu, then on Devices and Printers. Select the Universal Printer or any other printer, to display the Print server properties button at the top of the window:
Once in the Print Server Properties, click on the Driver tab to manually add your (for example) XP 32 bits drivers:
You can of course also directly install your printer drivers using the Printer Manufacturer Website.