If this setting is "on" the server will be responsible for handling the redirect on busy functionality. From the call perspective the phone will act as if no redirect was set (all is managed by the server).
The PUI will show the current setup if the server synchronizes it's values with those on the phone(state and target). This setting does not specify how the server changes the redirection values nor how the phone updates them. (it may be done via TR69, DFKS or starcodes).
The phone user will see the value from server_managed_fwd_busy_state and server_managed_fwd_busy_nr as the current redirect on busy state, and this value can be changed at anytime by the server.
This setting does not specify how the server changes the value of server_managed_fwd_busy_state and server_managed_fwd_busy_nr nor how the phone updates them (it may be done via TR69).