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What does "google background data sync" option do?

It'll disable syncing of your Gmail, Google Contacts, and Google Calendar. If you use any of those things, I'd leave it on.
 
I turn off syncing my Contacts.

I sync my Calendar and my Gmail, since I use both of them very frequently (especially the calendar, for work).

I turn on the Contacts sync like once a week or once a month, just to make sure my contacts are backed up. it saves a little battery to turn any of them off.
 
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