That's not a "error" it's just a "warning" and actually is not a particularly useful or valid warning at that.
The only real reason you would want that setting to be "on" is to compensate to some degree for poor coding practices or to facilitate a plugin that requires its.
The core Joomla! installation doesn't care about that setting, and there is no advantage to having it on for Joomla! itself or for well coded plugins. There has been considerable "discussion" over this "warning" on the Joomla! forums, and I believe that, on DreamHost, you are really better off with it set to "off".
My advice is to ignore it.