Exact same question - I don't understand what it does because i see no difference with Appium Tests
msceth
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Raised a feedback as well, won't be visible for you but still here the reference number:
https://feedbackassistant.apple.com/feedback/11983078
Glad to hear some answer, however
Removing the passcode is no valid workaround since we have apps that require the passcode to start.
Testability is completely ignored also with Apple, at least add the option to disable the Unlock prompt under the Developer Settings.
Put a disclaimer that your device is at risk when activating Developer Options.