When enabled, public profiles set up a customizable user profile page for each user on your site.
Turning this option on creates a new page under Home called Members. Visiting the Members page presents a list of all current users on your site. Users can then visit their own profile and upload a profile picture, edit details, etc. The "Fall Back to Gravatar" option will check if the Gravatar service has an avatar associated with the user's email address, and otherwise will use one of the default random Gravatars.