Swaps the sticks. When you hold L to aim it's normally the right stick to aim and the left stick to move, like it is when not holding L. With "classic" on the left stick becomes aim and right is move. I don't really see any point to it, I think RE4 on the gamecube was like that because it only used the one stick, but for whatever reason they made it an option here.
--- And now, Cookie-puss, I will eat your SOUL! Full of country goodness and green pea-ness. Wait, that's terrible. I quit.