During normal operation, if a member attempts to login, and no local user record is found, then Memberium will search the Infusionsoft database for a matching contact, and attempt to create the user on-the-fly so that the user can login.
When this setting is turned on, and there is no WordPress user created, then Memberium will NOT check the Infusionsoft database, and will simply fail the login as no user found.
You can find this setting under Memberium -> Settings -> Logins tab.
This setting, when turned on is effective in protecting your API usage against brute force login hacks, without impacting the ability of your users to login, like some other solutions.
The default setting for this is Off/No.