Unicode enabled will transfer Unicode data to and from the server when connected to a Unicode database. When disabled, data will be transferred in the local character set, as defined by the NLS_LANG registry key.
The "check for client & server character set mismatch" option will check if the client character set and server character set are compatible. For example, if your server character set is UTF8, and your client character set is WE8MSWIN1252, you cannot use UTF8 specific characters in your SQL or PL/SQL code.