I will flog myself.

This setting affects the REQ filter submitted to those relays, by requiring the authors to be someone you follow.  It currently does not affect the events selected into the feed, so once those events have been downloaded they aren't filtered out based on (seen on, author) information.

I put some work into fixing that (and other similar inconsistencies) a while back by creating FilterSets which was meant to unify relay REQ subscription filters with feed event-gathering filters.  But as I look today clearly I didn't actually get that work over the finish line. 

 That’s a paddlin’ 
https://media.tenor.com/JYoNxvVcPRsAAAAC/paddling.gif
 

 All you need to git rid of all the spam. 😂 https://i.nostr.build/bTjWbfZBT3C5uk3e.jpg  

 What is that button for? 

 Shows you notifications from people you follow. Takes out some real people you dont. But all in all very powerful.