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This parameter limits maximum IO size from esxi host to your storage.
If your storage array is not optimized for large block size (for example 1 MB and larger) you can expereince storage performace issues when your VMs do IO with large block size.
In this scenario this parameter can help to split large block into smaller blocks.
There are some other storage vendors who recommends limit IO for their storage as well.
You can also read the article in KB VMware Knowledge Base