After a conversation with one of your team members to clarify what this setting means, I realise the use of the word "opportunities" in this case is quite confusing and probably misused. We already have "Opportunities" related to Pipeline Opportunities. But in this case, the "opportunity" means "entry" or "execution". My initial question to your support team was weather this would override the "Allow duplicate opportunity" setting in Business General Settings, which isn't the case, because they mean different things. Haseen Fatima clarified that, when this setting is toggled on in a workflow, it just means that the contact will be able to enter a workflow again, even if they are already in it, as a separate execution and potentially follow a different path, but it won't create a duplicate opportunity in a pipeline. If there are opportunity creation/update actions in the workflow - it should simply update the opportunity assignment or remain the same (the most recent execution will update the previous one).

Just think this is an important aspect of user experience, that the terms used are not conflicting. Thank you!