See microsoft/vscode-python#13264
The option might still be useful for other clients, but the issue highlights the fact that its current name is very client-behavior-specific, and doesn't accurately represent what it does: whether pass the arguments to the debuggee directly, or via the terminal. It should be called something like "argsFormat" or "argsPassing" instead.
Until that's decided, the option as is should not be considered stable, and the docs should reflect that.