OFF is the normal setting.
If ON, then the AI will buy its leg infantry by the platoon (not company) in general, and
if it has the points, it will tend to buy more tanks (a company buy more often than e.g. a platoon). So you will only notice the difference on higher points battles (for whatever value is "high" for AFV of the period - less points needed in 1960 than 2005, obviously). And AI tank heavy has a second opportunity to buy tanks per pass through the purchase loop
if there are sufficient buy points remaining. At the end of the buy cycle, it'll still buy cheap stuff to use the remaining points (rifle platoons, scouts, inf-AT teams, snipers etc) till points are expended.
But don't expect a 2000 point skirmish buy to show much of any difference in any period - 10K points, maybe, 30K in the 1990s etc with 500 point MBTs probably.
Also - some leg-only type armies will use infantry forces in the AFV AI pick slots, so all that AI tank heavy would do for some tribesmen type armies, is produce more warbands
!. AI tank heavy is only relevant to armies which have access to proper tank 'fleets'. No Mujadeen panzer divisions!.
Cheers
Andy