Hi, I have read the article linked in the comment below (above) and some other article and will try to outline my understanding of the various options. However, I am just an interested amateur, so this information may be completely misleading.
The "Default" option says that the HTTP header Referer content in HTTP requests will be controlled either by the site itself, or by the Referrer-Policy header settings of the site, or by the browser (where the default setting as of 2021 is strict-origin-when-cross-origin).
And the "Disable cross-origin referrer" option seems to either remove the Referer header from HTTP requests completely, or fill it with a no-referrer value.
Overall, it's a privacy option in the sense that when being redirected from one web page to another (either by clicking or automatically), thanks to this option we can control how much information about the original page (and our "position" on it) the next page receives.
I would be grateful if someone could correct my conclusions.