The file will be read by the ntpd init script on service start. The default contents is as follows:

# Command line options for ntpd
OPTIONS="-g"

The -g option enables ntpd to ignore the offset limit of 1000s and attempt to synchronize the time even if the offset is larger than 1000s, but only on system start. Without that option ntpd will exit if the time offset is greater than 1000s. It will also exit after system start if the service is restarted and the offset is greater than 1000s even with the -g option.