Extensions are powerful modules that may be added to WPtouch Pro to enhance the appearance and performance of the mobile and/or desktop themes. The Responsive Images extension is available as an add-on to your license. To add it to your license, go to http://www.wptouch.com/pricing.
Installation instructions for Extensions are here: Extensions
Responsive Images is included with Developer and Enterprise licenses.
"Make desktop images responsive" will optimize the images used by your desktop theme when viewed on mobile devices.
With this setting not activated, the image quality used by your desktop theme will be the same (i.e. larger) when that desktop theme is viewed on a mobile device. For more information about viewing the desktop theme on mobile devices, see: Desktop / Mobile Switching