It's an option for processing the user name of an authenticated user. It's used to control whether you get "myuser" or "mydomain\myuser" as the user name for mapping to a postgres login role.
So it doesn't impact SSPI directly, although they're related processes. Consider pg_hba to be the bouncer, you have to get past their requirements before the club owner (postgres) checks if you're on the guest list (login roles) and lets you in. In this example include realm is like checking either your name (0), or name and home town (1) against the guest list.
