What does "Link" do in LibreOffice Writer -> page -> background tab?

When selecting a graphic background (e.g. watermark) for a LibreOffice Writer page style, a Link check-box is present. What does selecting or not selecting this check-box do?

The program help displayed for the background tab of apage style says in the section Using a Graphic as a Background

Link - Links to or embeds the graphic file in the current file.

OK. So which is it? Does checking the box merely link to the file and not embed it? (Which I is what I would expect, but am not sure about.) Or does checking the box embed the graphic file so that it is included as part of the document you are creating?

While it is not really pertinent to my question, I am curious in what context a person might ever want to not embed a graphic into a document? I suppose if the graphic could also change while the document was being created it would make sense to not embed it. But I would expect that eventually one would want to embed all of the previously linked graphics prior to distributing the finished document. Is there an “easy” way to “unlink” and embed all the graphics without revisiting the property page of each and every linked graphic object?

I am not sure if it matters for this question but, for the record, I am using LibreOffice Writer 4.1.4.2 and 64-bit Windows 7.

Background: I am asking because the background watermark is “disappearing” from my document and I would like to know how things are intended to work before I assert that something is not working.

Does checking the box merely link to the file and not embed it?

This is correct.

in what context a person might ever want to not embed a graphic into a document?

There are several reasons why, including legal, use of a centralised image library, convenience of updating images, etc.

Thank you. The purpose of “link” still confuses me. I assume that if the document is distributed it must be (for example) exported as a PDF. This assumes that exporting a document to a PDF embeds any linked images into the PDF. (But how else could it work?)

Export to PDF does embed images in the same way that printing a web page to PDF does. This is not the only way to distribute a document with linked images though. The images and document can be include in an archive.