After each major patch the game updates it's own APIversion by one. Currently it is at 100028.
Next patch will be 100029.
Inside the addons or libraries zip archive there is a txt file (the manifest) where the tag ## APIVersion: 100028 could be in.
It also can be 100001 or other values below the current APIversion which then shows this addon/library as outdated.
But the addon/library could work properly as it is only a number comparison without any further checks.
So this checkbox "Allow outdated addons" does nothing than skip this number comparison and has no relevance if the addons are really working or not.
Most addon devs see no reason why they should invest time each patch to update addons just to increase the txt file number by 1 so the addons show as updated. Tjis effort will include creating new zip file, uplaod it, get it posted, etc.
And maybe for about 30 addons each patch.
No, thanks. We also want to play the game and do addon coding in our free, unpaid time
Just enable the checkbox after a patch and don't wonder if anything is shown as outdated or old or whatever.
As long as you do not get any lua error message ingame you are fine.