What exactly does Recycle app pool mean to the application

In the properties, there is a checkbox checked that says "Recycle worker processes", which is set to 1740 minutes.

What exactly does it mean to my asp.net code? Will everything be gone from the static variables or the Session/Application variables?

What exactly does recycle mean to the code?

Recycle means start a new set of processes to handle new requests for applications in the pool. Any outstanding requests will complete normally (assuming they don't take too long) at which point the old set of processes for the pool will terminate in an orderly fashion.

Hence static variable values and values stored in the application object will be lost, also if the session is stored in-proc then the session values are also lost.

IIS will recycle the worker process hosting your app. That means your AppDomain, HttpContext, static variables, everything, will be reset.

It's always good practice to code as if the entire process could be torn down at any time.

Recycle means that IIS working process will be shutdown and new one will be started. I.E it will restart your application. It is a safeguard vs stuck threads/memory leaks in your application.