meaning of "send as sms when imessage isn't available"?

I want the option to "send as sms when imessage is unavailable" to turn off. But if it's on, does that mean it sends as SMS when imessage is unavailable on MY end (the sending end), the receiving end, or both? Example: while I had this option on, if I texted a friend whose phone was on airplane mode or off, it would go through as sms and not imessage. With this option off, if I imessage someone and their phone is on airplane mode/off, would it send as SMS because imessage is available on my end? Or keep it as an undelivered imessage because imessage is unavailable on their end?? I hope that made sense! Basically I'm asking what scenarios constitute that imessage is "unavailable"