If checked, anonymous Peertube users won't see the chat. This feature is still experimental. If you enabled it, it is highly recommended to also check "Don't publish chat information". Otherwise, some third party tools could try to open the chat, and have unpredictable behaviours.
By enabling this option, each time an anonymous user is banned from a chatroom, it's IP will also be banned from the chat server. Warning: if your instance is open to registration, any user could create a trapped-room, invite users to join, and automaticallyban all anonymous user's IPs. The banned IP list is not stored, it will be cleared on server restart, or when you change some plugin's settings. The banned IP are logged in the Prosody server log files, so server's administrators can eventually use some external tools (like fail2ban) to ban IPs more widely.
You can choose from several different sets the default avatars that will be used for chat users. Please refer to the documentation: <a href="https://livingston.frama.io/peertube-plugin-livechat/documentation/admin/settings/" target="_blank">Settings</a>.