The "Move controls on expand text or list" option works only with TextBox and Listbox controls. If you don't check "Move controls on expand text or list", then the text box or list box will expand vertically as needed but no other controls will be affected. This could be useful if you have some special window design where the rest of the controls should remain where they are, although you need to keep a blank area below the control so it can expand without overlapping other controls.
If you tick this option, then all the controls below the bottom line of the text box or list box will move down, and all the controls surrounding the text box or list box will resize accordingly, so the window will "stretch" to make the whole text or record data fit in the report.