This is an option that appears when 1-UP or 2-UP is turned on. This feature allows an Member to specify if a person in their downline must qualify (and passup their first sponsor, etc. as required by the #-UP). If it is set so they are not required to qualify, then that Member keeps every person they refer and doesn't have to pass any referrals up to their sponsor.
There is a report on the "Referral Program" page at the bottom of the page where you can see who has earned what and what payouts you need to make.
You need to manually do payouts. For PayPal and Payza there is an export to CSV option which allows you to make all of the payouts at once.
To setup reverse 2up tracking:
1. Go to Advanced Features
2. Commission Tracking Tool Settings
3. Change "Type of Tracking" to Reverse 2UP.