This is interesting, and puzzling!
So, your quote is from the Virus TI manual from 2006 (for the TI1). The chapter Keyboard to MIDI is omitted in the Virus TI Reference from 2013 (for Virus TI2). That’s why I couldn’t find it.
Also, I couldn’t remember to ever have seen this option because I only used Multi Mode on the Desktop, not on the Darkstar. I had to power up the Darkstar and do some menu diving to find this option. It’s there for sure, but I have no clue what it’s supposed to do (the description in the manual doesn’t seem to make a lot of sense to me).
Further digging revealed that the whole chapter Keyboard, starting on page 155, is missing in the newer Virus TI Reference as well. It contains the following explanation of the Mode settings:
Quote from Virus TI Manual (2006), page 155
This parameter can be set in Single mode, but it only applies to MULTI mode. See “Multi Mode Reference” on page 165.
> One Channel: The keyboard transmits MIDI data (notes etc.) to the currently selected Part via the MIDI channel defined in that Part.
> Multi Channels: The keyboard transmits MIDI data (notes etc.) to all Parts, regardless of the assigned MIDI channel.
It seems that this is somehow related to the Keyboard to MIDI setting in Multi Mode.