Choosing the "Now" option opens up the door for your current employer finding out that you're looking for a new job and have actually applied somewhere that is taking your application seriously. If you don't end up getting a job offer at that company, then you have uneasiness with your current employer who knows you're looking.
Choosing the "After conditional offer" option limits that since they're only contacting the current employer after they've shown a more genuine interest in hiring you. This is helpful in keeping your application 'secret' from your currently employer until closer to the point where you'd actually be transferring jobs. If you don't have anything to hide, there's no reason it should eliminate you at either stage in the game.
If you're not currently employed, choose the "Now" option. There's no reason to beat around the bush. They're basically saying they are going to check at some point, so just get it out of the way rather than waiting until later. If you do have something to hide, don't make them waste their time because it's possible they'll take it a lot more seriously if you make them wait longer to get the information.