Are you sure you mean checked and not unchecked?
If "Use site ip for passive mode connections" is unchecked the IP address returned from the PASV reply will be used unless it is determined to be local network address, in which case the server ip is used.
Now if this option is checked the server ip is always used. If the site address is a host name, this host will be resolved each time and update for each pasv request.
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