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Just as the question asks, what is the multiply option in the points for and when is it triggerred in the system

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You have a multiply number (e,g, 100), which multiplies the reputation points of all users. This multiplication is visible in all places where the user's reputation score is shown.

It is useful when your service is quite small at the beginning, and you want reputation points to look better (bigger numbers) - then you set this option.

If you don't want point scores to be multiplied, you set the value to  1 .
What is more, you can change multiply value even if your website is already running and have users. In that case, their points will be recalculated.
Does it mean the points are multiplied and kept ie if I set the multiply to 2 it will add/deduct double points for all settings. If I then reset multiply back to 1, do users that asked or answered questions have their points reduced or do they keep the reputation they earned whilst multiplied ? Thanks
The latter - if you decrease multiply value, users will have thier reputation reduced.