Require obfuscated server connection
Require obfuscated server connection makes sure that only obfuscated traffic to servers is sent and received.
This has, at the time of creation, the big advantage that less connections to fake/ad servers are made since most do not support obfuscation. The protocol specifying how to make obfuscated connections to a server is open source and documented, so in the future fake/ad servers might also appear.
A side effect of an obfuscated connection is that no one can spy on your traffic or easily change it. But remember that obfuscation does not make eMule an anonymous application.
To make an obfuscated connection to a server, first, an encryption key has to be exchanged (obfuscation is done by encryption). This can be done by a UDP "cryptping" package, or by making a non-obfuscated connection. If UDP fails or no previous connection has been made, then the obfuscation will fail and the connection will not be made. As of Morph 9.6 there is no GUI indication if a valid encyption key is available.
The "required obfuscated server connection" option is independent of the security settings. So most of your client connections will still be non-obfuscated. Only if you completely disable obfuscation in the security settings will this option be disabled.
Obfuscation also makes that ip adress of servers can not be faked in udp traffic.
With an obfuscated connection to a server, other servers are unable to fake the IP of the server using UDP traffic to a client.
 Official behavior
Note that official has a "require obfuscated" option, but that still allows unencrypted connections to servers that do not support it. Also "require obfuscated" is not recommended since you cannot connect to other clients that do not support it, limiting the number of sources you can reach by a lot.
Note that by default on official obfuscation is supported, but not enabled. This means that obfuscated connections are accepted, but not initiated by the client.