Mail.dll uses IMAP over SSL/TLS to access Gmail. This is secure and safe way of accessing an email server. It relies on .NET framework security model.
This setting affects IMAP access (even with SSL/TLS turned on). Using login methods that require knowing user's password (e.g. Login, UseBestLogin) fails, when this setting is off.
Workarounds:
It is not an issue of whether or not client application is implementing the latest version of SSL/TLS etc., Google simply tries to limit places that store users' passwords.