It is a fairly technical issue, and not terribly important, but to explain.
When you go to the question bank for a quiz, it looks like this:
- Quiz: My quiz
- Default for Quiz: My quiz
- Test category
- Course: My course
- Default for Course: My course
If you export 'Other category' then, with the option on, what is written to the file is category="$module$/Test category". With the option off, what is written is category="Test category"
Now, if you import this into the question bank for another quiz, then for the option on case, you end up with
- Quiz: Other quiz
- Default for Quiz: Other quiz
- Test category
- Course: Other course
- Default for Course: Other course
In the option off case, you end up with
- Quiz: Other quiz
- Default for Quiz: Other quiz
- Course: Other course
- Default for Course: Other course
- Test category
Because things normally default to the course category if nothing else is specified.