I’m certainly no expert, but here’s what I think the “ASIO Latency Compensation” option should probably do.
For most users having it ON for all MIDI tracks by default would probably be wise to keep MIDI and audio synchronized. But, for those that want to compensate for it while playing (as suggested by Novikthewise as well as Propellerhead and Ableton manuals) or who want to minimize monitoring latency, it would be nice to have the option of turning it off on selected tracks.
For all tracks with “ASIO Latency Compensation” ON, MIDI inputs should be delayed by the reported input latency of the audio interface. MIDI outputs should be further delayed by the reported output latency. Tracks with “ASIO Latency Compensation” OFF should not be delayed. A good explanation of this in the manual would likely be helpful as well.
I’m not a musician or music producer (my son is) so I’m not sure if any of this is correct/reasonable. I encourage others with more experience to chime in. 