For most users, their computer does not need to be active and running all the time. This is a common point of energy waste for any computer, whether PC, Mac, Desktop, or Laptop. This option will put your computer to sleep automatically assuming there are no programs running that require it to stay awake. The effect is the same as if you manually clicked the Apple logo and chose "Sleep".
The best option here is to consider the amount of time you'd typically be away from your system before returning. If you are often distracted from a computing task (by kids, pets, the doorbell, and so on,) setting this value to 20-30 minutes will be sufficient. It will give you energy savings but not require a waiting period to wake up the computer. If your workload requires, it is easy to set this value further out.
Depending on the roles your computer plays, you may even consider disabling the sleep option entirely. I have one Mac Mini acting as an iTunes media server which remains on all the time (for the AppleTV in the bedroom.) Consider the workloads and adjust accordingly.