When converting a mkv with a DTS track to AppleTV 5.1+2.0, it would only create a "normal" stereo AAC track in the resulting file. If the original file had a DD5.1/AC3 track, this setting would create the correct file for s/pdif output of the ac3 track on the AppleTV.
If AppleTV can also output the DTS track over s/pdif, then please enable that. If not, please let us choose to use the ffmpeg (or other) DTS 5.1 to AC3 5.1 conversion, which is already in ffmpeg.