Typically, palaces 1, 2, and 3 are found in the west, 4 is on Maze Island, and 5 and 6 are in the east. When this option is selected, any palace can show up on any continent, with the exception of palace 7 which will always be in the Valley of Death on the eastern continent (unless you use the Great Palace shuffle option, see below). Each continent will still have the same number of palaces: 3 in the west, 1 on maze island, and 3 in the east.