This new Restrict discovery of SharePoint sites and content option is now available to you if you are using Microsoft 365 Copilot. You will find the above option in the SharePoint Administration console, when you select an Active Site and then navigate to settings.
According to the docs:
Restricted Content Discovery doesn’t affect existing permissions on sites. Users with access can still open files on sites with Restricted Content Discovery toggled on.
and
This feature can’t be applied to OneDrive sites.
and
Overuse of Restricted Content Discovery can negatively affect performance across search, SharePoint, and Copilot. Removing sites or files from tenant-wide discovery means that there’s less content for search and Copilot to ground on, leading to inaccurate or incomplete results.
This feature is part of Microsoft ShrePoint Premium – SharePoint Advanced Management (SAM) which is being included with M365 Copilot licenses.
In essence, once you have a M365 Copilot license it is quick and easy way for an administrator to restrict Copilot being used with a certain SharePoint site. Check the Microsoft documentation for more information:
https://learn.microsoft.com/en-us/sharepoint/restricted-content-discovery
CIAOPS 