This feature will remove unnecessary whitespaces from HTML. You can save only some bytes with this feature. Many a little makes a mickle, but it is not a showstopper if you don’t enable it.
Fix Invalid HTML
Swift Performance DOM parser needs a valid HTML to optimize static file delivery, and HTML code.
Some themes and plugins generate invalid HTML code. The proper solution if you report it to the author who fixes it, however regarding that it can break Swift Performance DOM parser, and the optimization process, as a quick fix you can enable this feature.