ADMIN: Catalog → Attributes → Manage Attributes
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This option defines how the attribute you are working can be used by Magento. If the value is set to
Yes then Magento will only allow any single label/option of this attribute to be used once and only once by any product. So if one product has already selected a label/option in this attribute list, then no other product my select that same value.
In contrast, if the value is set to
No then multiple products my share the same value for this attribute.
The option sets whether Magento will require the attribute have a value selected when creating the product. If this option is set to
No then you can create a product with this attribute and have this specific attribute be left blank