If you are looking to populate the members contact details or allow the member to populate their own details, then set the field "Enable Membership Search" on the "Payment Form".  

For the picklist values, the word "Internal" means a Salesforce logged user and "External" means a member/contact on your public website. The picklist options therefore mean:

• Yes - External Validate, Internal Search and Display.  Internal logged in users can use the search. Public website visitors cannot do the search, but the combination of Membership Number and Last Name are validated when the form is submitted for processing.
• Yes - Internal and External Search and Display.  Both Internal logged in users and public website visitors can both to a search and auto populate of contact details.
• No. or Blank.  Means no search or validation of Membership No. and  Last Name will occur.

For the search to start, both the "Membership No." and the "Last Name" fields must be entered on the Checkout Form.