As the description under that will inform you, this will move all of the iMessages you get from senders not in your contacts into a different list.
You also won’t receive notifications when an unknown person sends you an iMessage—but you will see the red number badge appear on the Messages app icon, so you’ll still know when something new has arrived.
Hey, look! I got some spam!
Anyway, if you tap that “Unknown Senders” section in Messages to read one you’ve gotten, you’ll be able to report the conversation to Apple as junk.
And finally, Messages is smart enough to realize that if you reply to an unknown sender or add him to Contacts, you probably know the person in question, so it will remove the choice to report the conversation.
(That option’ll come back, though, if you delete the conversation and the same person sends you another spam iMessage.)
Unfortunately, this easy method only works for stuff sent through Apple’s iMessages system. If you want to report a spam SMS you receive instead, you’ll need to go through your wireless carrier, but for most (AT&T, Verizon, and T-Mobile included), the way you’ll do so is simple. Just forward the unwanted SMS to 7726 (“SPAM”) by tapping and holding briefly on it until you see “More”…
…and after you touch that, you should see an arrow appear at the bottom-right of your screen that’ll let you forward what you’d selected.
You’ll want to follow any instructions you’re sent afterward to help your carrier take care of that nefarious, annoying, Viagra-pushing, horrible, embarrassing SMS sender. Not that I have anything against people who do that, oh no.