The Texture Settings tab contains settings related to Terrain Layers and the Terrain Alphamap.
In most instances, it is necessary to duplicate the Terrain Texture Layers on the source terrain for each generated slice, as it is necessary to specify a unique texture offset value for each slice's textures. Leaving this option enabled will do that.
In some instances, which is largely dependent on the textures you are using, duplication is not necessary (if your textures are solid colors, for instance, they should not need to be duplicated). In these instances, you can disable this option and the texture layer assets will not be duplicated. Each slice will use the same layer assets as the source terrain, which will reduce the number of assets used and potentially improve loading performance (slightly).
If you are not sure, you can try performing a slice operation without duplicating the textures first and then looking at the edges between neighboring terrain slices. If the textures on one terrain line up with the textures on its neighbor, then duplication is not necessary. If they do not, then all texture layers will need to be duplicated (even though it is only some of them that might actually need to be duplicated).
If you decide to leave this option enabled, you should specify the folder where the duplicated texture layer assets will be stored in the field that appears below it (Layer Save Folder).
--Upgrade Note--
This is a new setting only available with Terra Slicer.
You can enable Don't Slice Alphamap to force the slicer to not slice the source terrain's alphamap. Each generated slice will not have an alphamap, unless you enable the Copy/Duplicate Texture Layers option.
Generally speaking, you would only enable Don't Slice Alphamap if using a custom shader that does not utilize the alphamap.
If you enable Copy/Duplicate Texture Layers, the alphamap of each slice will just be set to the first texture layer.
--Upgrade Note--
The Copy/Duplicate Texture Layers setting was previously called Copy Splat Textures.
When slicing the alphamap, blending is automatically performed on the generated slices' alphamaps to ensure that there are no seams between neighboring slices. If you want to forego this blending, you can enable this option.
The Blending Width controls the rows or columns of pixels along each border that will be blended. Since blending will blur the alphamap slightly, we recommend making this value as small as possible. A value of 1 actually works well in most cases.
--Special Note--
If you notice white lines or seams between neighboring slices after a slicing operation, even with alpamap blending enabled, it is likely due to the terrain neighbors not being configured correctly in the editor.
To test to make sure this is the case, you can enter Play mode, and so long as Auto Connect is enabled on the slices, the white lines or seams should disappear. If you do not want to enable Auto Connect, you can add the Auto Neighbor Setter script to the first slice in your group, configure it, and enter play mode.