Changing sails costs time: hoisting a kite, dropping a genoa, taking a reef. Without a penalty, a router changes sail as soon as the instantaneous gain is positive, even a tenth of a knot for three minutes.
The Sail change penalty setting sits in the Routing settings, in the same block as the tack and gybe penalties. Its default is 120 seconds.
When it applies
The penalty only makes sense if your polar carries a Sailchart: without one, routing has no sail identity and the penalty stays inert.
It adds to the others: a gybe that comes with a sail change costs both.
One important point: if the cell you enter still allows the sail you are carrying — that is what alternates in transition bands are for — you do not change sail, so you pay nothing. This is what prevents back-and-forth changes along a boundary.
Which value should I use?
The time it really takes you, crew included, between deciding and having the boat back up to speed. Short-handed on a cruising boat, two to four minutes is realistic; with a trained racing crew, one minute may do. Setting 0 lets the router change sails as often as it likes, free of charge.