If set, items based on the Schema cannot be checked-in except by workflow. The idea being that you add the items to a Bundle and then Start Workflow on that Bundle when you are ready for all of the items inside to go through workflow.
Instead of being checked-in, the items will be "Waiting for Workflow" instead - even before you add it to a Bundle. It will be unlocked, so other people can continue editing it, with the caveat that they need to take over all previous changes too (so if they Undo Checkout, they throw away all changes -- not just their own). The CME and Experience Manager will prompt you to "take ownership" when you attempt to edit such an item.
The "preferred" part means that you could choose a different process for some items, but Experience Manager will only suggest Bundles that have Schemas that use the same process.