OEM stands for Original Equipment Manufacturer, and is typically heard about when discussing a topic like Dell computers, or some type of subject based around buying or selling hardware and software. When people refer to OEM software or applications, what they typically mean for the average computer user is something that is freeware or trialware, meaning you can use the full software for free or use it for a certain amount of time then you must buy it or lose access. Pre-installed means that it comes already installed and ready to launch out of the box on a clean install of Windows.
Inside NTLite, the menu that runs up and down on the left side is categorized by the type of tweaks they contain. All the "Settings" for example, are registry keys. This "Pre-installed OEM applications" option is underneath the "Privacy" header, which means everything under the header is specifically toggling the privacy aspect of each item. What this option should basically do, is toggle the privacy for all bundled software that comes included on something like a Dell recovery disc. A choice of "Disabled" would restrict access to things in the privacy header, meaning security is increased. If you install Windows from a retail version, it won't have OEM files bundled and this setting will do nothing no matter how it's toggled.