In the settings area you can see that there are two check boxes - one is for documents/pages and second one for files. They have different function.
The meaning of them is that you have the file in culture A but not in culture B. Now the user is browsing the site in culture B and wants to view the image. But this user will get 404 error because the file does not exists in the culture B.
If you will check this setting, the file from the default culture A is used and displayed, so there is no 404 error.
However, if you want to create some script to copy the file documents (CMS.File type), you can use our API and copy the file document from one culture to another. For more details please see this example