This setting is only used by the shrink action.

action: shrink
description: >-
  Shrink selected indices on the node with the most available space.
  Set the number of replicas to 0.
  shrink_node: DETERMINISTIC
  number_of_replicas: 0
  - filtertype: ...

The value of this setting determines the number of replica shards per primary shard in the target index. The default value is 1.