So I just tested my addon (AdvancedInterfaceOptions) to see how debuffs appear on a target when changing this setting:
I just did two fights against the Grand Empress with two different groups. I had to do two different groups as you are unable to change /cvars during combat.
With that setting checked (i.e., not filtering the debuffs), this is how the Grand Empress fight looks:
But when I unchecked that setting (and let the game filter the debuffs), then the fight looked like this:
