Hi Sohil Gogri,
As per Microsoft documentation, managing user consent to apps in Microsoft 365, this setting controls whether users can give that consent to apps that use OpenID Connect and OAuth 2.0 for sign-in and requests to access data. An app can be created from within your own organization, or it can come from another Microsoft 365 organization or a third-party.
If you turn this setting on, those apps will ask users for permission to access your organization’s data, and users can choose whether to allow it.
Hope this helps.
If the answer is helpful, please click Accept Answer and kindly upvote. If you have any further questions about this answer, please click Comment.