For what I expect to be clarity of the above, if an object such as a product already has a rewrite, then I would expect the above image but with one minor difference that the checkbox would not be (automatically) checked. I would expect it to be auto-checked only if the product does not have a rewrite *and* that checkbox is defaulted to be on through the settings of the module.
Otherwise I would expect the above to be accurate... name change followed by checking that block and moving through the save aspect would cause a new rewrite to match the new name and whatever other settings there are. At least unless that new rewrite matches any that have previously existed...
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