Just to be clear, when anyone here mentions "cabinet", or "real cab", they actually mean a real guitar amplifier cabinet. This would be something like a Marshall 1960A, or something that says "Fender", or "Vox" on the front, and is intended to be attached to a guitar amplifier.
This does not include general purpose speaker cabinets such as studio monitors, PA systems, or wedge monitors. Essentially, anything designed to faithfully reproduce a full range of sound in a transparent and high fidelity fashion is not a "guitar cabinet", and does not count when people here refer to using a "real cabinet".
The "cabinets on" option in the AxeFX turns on the cabinet modelling. This allows the unit to emulate the colouring of the sound that a real guitar cabinet would produce. If you are actually using a real physical guitar cabinet attached to your AxeFX, then you do not need to use this emulation and you should turn this off. If you are using any kind of speaker that you would generally use to listen to something like a YouTube video, you should turn it on, and include a "Cab" block in your preset.