|If you select the Retain Initial State option,
the products and resources that exist in the current process document are
captured in the replay object. (The unassigned products and resources
appear in their initial state.) This may take some time.
If the button is not checked (default value), in the generated video only products and resources assigned to activities under the process start from their initial state; the unassigned products and resources appear in their current state at the time of video generation. This usually improves performance since in most of the cases not all of the products/resources are used in the process.
The difference between the two options appears when playing the replay object: the result of the replay created with the initial state will always be the same, since the current state was stored in the replay object for all the products (assuming you do not add new products).
The result of playing the replay created without retaining the initial state (for the unassigned parts) can look different, based on the current state of the unassigned parts.