In this area, you can choose the default notification settings for different situations:
Default notify settings for project itemsIn this section, you can choose to have the 'notify' option selected by default when a new task, milestone, message, file, notebook or link is added. For tasks, this will only apply when the task is assigned so that everyone on the project won't be notified if you assign it to 'anyone'.
Default notify settings for commentsIn this section, you can choose to have the 'notify' option selected by default when the first comment is added on an item in the project (for example, a task, file or notebook). You can select whether to automatically select the person who created the item, anyone assigned, or if the item (task or milestone) is completed, the person who completed it.
Note - when you change any of these settings, it will affect whether the 'notify by email' option is selected or not automatically. However, the person adding the item, making the change, or adding a comment will always be able to go ahead and choose who they would like to notify of their activity manually - this is purely a default setting (the only way you can prevent people from notifying you is to disable notifications in your profile on the project).