Refer to the documentation:
technet.microsoft.com/.../aa590734(v=ax.50).aspx
ax.help.dynamics.com/.../external-codes-page-field-descriptions
"Select this option if the external code is an officially standardized code."
I.e. it complies with ISO, TÜV or any other standards.
I belive it is an indicative field only for audit purposes, however, you can easily verify that with cross-references in the AOT to see whether it is used in any code.