1) how to find it
CE: File>Settings>User>Preferences>Input>Locate Inerteriors:
V8i: Workspace>Preferences>Input>Locate Inerteriors
2) What is possible to do:
Never = You will NOT be able to select faces if you click inside the face i.e. inner area of the face (except on face edge) either it is rendered or not. You will be able select a face thru its edge only.
Visible = If the view is rendered then you will be able to select faces by clicking inside area of the face. If the view is not rendered, then clicking inside will not select the face. You need to select by its edge.
Always = You will be able to select face by clicking inside face no matter view is rendered or not.
Never = Same as above
Rendered or Filled and Rendered Views = Same as "Visible" above. Also if the view is not rendered but if the shape is filled then it will allow to select inside that shape.
Filled Shapes = If the view is not rendered but if the shapes is filled (‘Fill’ option must be ON in View Attributes) then it will allow to select inside the surface.
Always = Same as ‘Always’ in Connect.