Let me put it this way. Having it on "blurs" the graphics so they look less jagged, almost as a form of anti-aliasing, but at the expense of visual sharpness and detail. Keeping it off makes the edges more jagged, but much sharper. It's suggested that if you're playing on an HD TV (especially with a component cable), you should play with the deflicker off (to get more of the visual sharpness), but if you're playing on a non-hd, you should play with the deflicker on. But it's up to you and what you prefer.
Personally, I noticed the option not too long ago and turned the deflicker off. And the game looks MUCH crisper and detailed to me (I play on a 37 inch HD)