Allow mock locations
This setting allows app developers to test their location-aware apps by providing them with fake location data. The use of mock locations allows testing of locations without the need to physically move the device around or to be in view of satellites, and to test in locations in different parts of the world.
When Allow mock locations is enabled, developers can use a separate mock location generation app (either one that they have built themselves, or a pre-existing one) to feed a specially-created "Location object" to the app that they wish to test.
The use of this option is unlikely to be a large security risk, as it only allows mock locations to be given to other applications. Nonetheless, it may be a good idea to disable it when not in use. This setting has no benefits for non-developers.