While you are using the Modify panel, this command toggles viewport highlighting of objects dependent on the currently selected object.
When Show Dependencies is on and the Modify panel is active, any object that is dependent upon the currently selected object in any way appears magenta. This includes instances, references, and shared modifiers. Default=off.
You can also see similar dependencies in Schematic View.

To show dependencies between objects:
Show Dependencies
Other objects with instances of the same modifier appear in a different color.
Example: To use Show Dependencies when animating with Linked XForm:
Show Dependencies to make the link visible when the control object is selected.
The selection is animated in parallel with the control object.