It basically means that the trains used in the scenario, are not limited by the track gauge or the type of electrification on the route. With Off The Rails-setting turned on, you can for example run electric trains in non-electrified routes or standard gauge trains on narrow gauge tracks.
Off the rails is for when you want to do anything you like with any train you like. So if you want to run a big american freight loco down the bakerloo tunnels, it'll allow it. Want to park a 12 car train on a 2 car platform? Fine Want to run electric trains down the West Somerset line? Cool You're still limited by the start, end and routing points of the dispatcher, but just about everything else is allowed
