This feature gives schools and organizations the ability to decide whether they will recognize an activity from an account they oversee.
If someone submits a volunteer hour for a school requirement that the school does not think fits their criteria, they can decide to not recognize the activity. Yet, the student can still see the activity and have that data on their personal account.
This goes both ways. Students can decide whether or not they will let their school or organization see certain volunteer activities. They do this during the verification step of recording the activity.