I think the following post I found over in the F3HR forums does a good job summarizing why it doesn't matter for running...
Even for hiking, the efficacy is probably dubious due to trees and what not already bastardizing your GPS signal.
If I think about hiking, I think about triangle, then I think of the Cosines. 5 degree: horizontal distance is 99% of the real distance. 10 degree: horizontal distance is 98% of the real distance. 15 degree: horizontal distance is 96% of the real distance. 20 degree: horizontal distance is 93% of the real distance. 25 degree: horizontal distance is 90% of the real distance. 30 degree: horizontal distance is 87% of the real distance.
With 3D distance OFF, which distance is measured? The horizontal or the real distance? And while GPS signal might be compromised by trees, in a stabile weather, is barometric altimeter accurate enough to measure the elevation change?
I think this could matter (a little) for navigation: if your paper map or marked trail signage tells you that a trail segment is x km to the next intersection, then using the wrong distance measure would throw off your navigation. If you have the map on your watch, I'm guessing it'll have any marked trail on it, so you could use watch GPS (and if you aren't using GPS due to battery or temperature, then maybe 3d distance doesn't work either? Or it could be altimeter-based? I haven't checked). So I guess useful to use the right setting on steep terrain if you didn't download the map...
