This feature allows the setting of security inheritance at the folder level. Once a folder is set to inherit its security from a parent folder, all subsequent sub-folders will automatically inherit their security settings from the parent folder.

When to use Security Inheritance:
Use security inheritance in instances where you plan on giving the same set of users identical rights in most of the sub-folders below. You can always go to any folders that are the exception and adjust their security accordingly. But using inheritance will save you the time of having to apply the same security to multiple places.
When NOT to use Security Inheritance:
If you wish to maintain a different set of rights for different individuals depending on the sub-folder, do not use inheritance.
Even if you chose to use inheritance, you may undo this by navigating to the folder in which you wish to discontinue inheritance. Display security settings by navigating to the Folder properties and selecting Security. In the security window, Click on Remove Permission Inheritance. This will remove the inherited security setting and allow you to assign a customized set of security that does not depend on the parent folder's security settings.
Important Note:
Removing permission inheritance from one folder does not affect its sub-folders, because they are still set up to inherit security. The only difference will be that they will inherit their security from their nearest parent folder. In this case, the folder you just removed inheritance from.