Options : Enabled, Disabled, 0.25%, 0.5%, Smart Clock
When the motherboard's clock generator pulses, the extreme values (spikes) of the pulses creates EMI (Electromagnetic Interference). The Spead Spectrum function reduces the EMI generated by modulating the pulses so that the spikes of the pulses are reduced to flatter curves. It does so by varying the frequency so that it doesn't use any particular frequency for more than a moment. This reduces interference problems with other electronics in the area.
However, while enabling Spread Spectrum decreases EMI, system stability and performance may be slightly compromised. This may be especially true with timing-critical devices like clock-sensitive SCSI devices.
Some BIOSes offer a Smart Clock option. Instead of modulating the frequency of the pulses over time, Smart Clock turns off the AGP, PCI and SDRAM clock signals when not in use. Thus, EMI can be reduced without compromising system stability. As a bonus, using Smart Clock can also help reduce power consumption.
If you do not have any EMI problem, leave the setting at Disabled for optimal system stability and performance. But if you are plagued by EMI, use the Smart Clock setting if possible and settle for Enabled or one of the two other values if Smart Clock is not available. The percentage values denote the amount of jitter (variation) that the BIOS performs on the clock frequency. So, a lower value (0.25%) is comparatively better for system stability while a higher value (0.5%) is better for EMI reduction.
Remember to disable Spread Spectrum if you are overclocking because even a 0.25% jitter can introduce a temporary boost in clockspeed of 25MHz (with a 1GHz CPU) which may just cause your overclocked processor to lock up. Or at least use the Smart Clock setting as that doesn't involve any modulation of the frequency.