This option will only affect the Text/Icons and Iconseditor, you will still be able to select any icon from the full list when configuring your Custom editors or working with the iconDrop option explained here in detail : Custom editors
From the main screen / Settings (gear icon) / Icons , you'll see this screen below
The full list has more than 500 icons to choose from. You can add a description next to each icon, or change the order in which they will appear.
Adding a description to icons is particularly useful when exporting your grade book data to CSV or XLS. Explained here: Export attendance data in PDF, CSV or XLS)
And this is how the Text/Icons editor will show our selection