This setting, in the Input category of the Preferences dialog, affects the way that solids and closed elements are selected. Generally, you select elements by snapping to their edges. When Locate Interiors is set to Always, however, a data point anywhere on a solid or surface will select that face element. This is particularly useful in a rendered view, where you can identify a solid or surface with a data point anywhere on the displayed surface.
Options for Locate Interiors are: Never, Visible, or Always.