This setting will stop vehicles from going "out of date" and so they will remain available until the very end of the game.
Normally, vehicles have a limited shelf life as well as a limited in-use life. When their shelf life expires, they are no longer available to purchase or replace and any vehicles of that type in play will slowly deteriorate.
This setting makes sure that vehicles are always available. Thus, you can keep a Kirby steam engine and run it next to a shiny new monorail.
If you activate this option before you start a game then it will be active for all future games, unless you disabled the option to automatically save the settings.
You can also enable this option during an already running game. It will only apply for this game then and by itself it won't get you any already expired engines back. To achieve that, open the Console and type
This setting is disabled by default. You can enable it through the Vehicles window or use the following syntax in Openttd.cfg:
[patches] never_expire_vehicles = true
Note that the reliabilty of the vehicles is not affected by this setting, so the older vehicles may be quite unreliable.