Sorry - wrong icon in my first answer.
The one you're asking about is the for a quick view of selfies before moving on to the next selfie. It only works with Gesture view turned on and using gestures to take shots.
Try this: Turn Gesture shot on and leave that icon enabled. Then hold your hand up in a fist to take a photo. It will count down 3,2,1 and take a photo. The selfie will then appear on your screen with the option to keep or delete.
Now leave gesture on, and turn the icon in question off. Again, hand up in a fist to take a photo. It will count down 3,2,1 and take a photo. The selfie will not appear on your screen after taking the photo.