From my understanding that flag should be checked if you have not entered the Hall of Fame yet. If that flag was unchecked you would encounter Lunala or Solgaleo too early in the story. With the flag checked the game will not load the event when you enter the area and once you become the champion the flag will become unchecked so that you can enter the area where you catch them and the event will happen as intended. So no you should leave the flag checked and your game is functioning as it should. If I am incorrect or left something out please correct me.