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The option "Transliterate prior to creating alias" has the description: When a pattern includes certain characters (such as those with accents) should Pathauto attempt to transliterate them into the ASCII-96 alphabet? Transliteration is handled by the Transliteration module.
Then there's anther option "Reduce strings to letters and numbers" with the description: Filters the new alias to only letters and numbers found in the ASCII-96 set.
Are these descriptions correct? I always thought that the first one means "Transliterate" and the second one means "Extreme transliteration" (true: ASCII-96, false: ASCII-128). If that is the case, then labelling the first option as "ASCII-96" is misleading and in fact inaccurate. Isn't the question of 96 vs 128 handled by the transliteration module anyway?