This setting reflects user permissions on a list level. There are 4 different levels: Basic, Standard, Admin, and Owner ("Owner" refers to the user who initially created the list). Below shows the actions that each level can take.
If you are the list Admin or Owner, this setting can be changed by going to the list, clicking on Share, adding the user, and finally editing their user level.
NOTE: At this time, only Admins and the Owner of the list will have access to viewing which users have which permissions.