No, it means they won't auto target it at all. As another change notes, a carrier that is on a hostile planet with enemies present and less than 500 AI ships will automatically deploy, so your defenses will always have something to shoot at until all the carriers are gone.
The toggle is because the "should it be autotargeted?" question had no clear answer before the invincibility mechanic was added, and we got a lot of reports of frustration from players who wanted them to be autotargeted (and then frustration from the other side when we changed it). If we wind up not needing the toggle, then great, but we'll see