This value is typically set as Yes.
Web Application Server install, SuperServer Server install and Standalone installs would set this to Yes.
Exceptions are instances where multiple installs access the same shared database. In such a case, it's up to the installer to check this option in the install dialog for the server and leave it unchecked for the clients.
For example, installing a Corporate Application, that is an Application using a shared database, only the first installation of the Application onto a user's PC will require the database to be setup as part of the installation processing. To help end-users install it correctly, the setting should be set to No so that only the Administrator installing it for the first time would need to change the default setting. The Administrator may even install it directly on the Database Server, even though it will not be executed there, just to have a restricted location to install it to.
It's also possible to set it to No and not allow it to be changed in the Local Database Dialog. Then it can only be changed to Yes by running it from the command line. This gives the best protection against inadvertent Database Setup.
To allow the first installation to override the setting of No, the option to Prompt during Installation should be selected.
Yes – Install tables and table data shipped with the Version or Patch into the nominated database. This will not create the database.
No – The database is not modified.