According to the MACS documentation (also linked from the tool form):
The option controlling duplicates is (quote):
It controls the MACS behavior towards duplicate tags
at the exact same location -- the same coordination
and the same strand. The default 'auto' option makes
MACS calculate the maximum tags at the exact same
location based on binomal distribution using 1e-5 as
pvalue cutoff; and the 'all' option keeps every tags.
If an integer is given, at most this number of tags
will be kept at the same location. Default: auto
Galaxy implements this as the option on the tool form as
"Pvalue cutoff for peak detection:" with "1e-05" as the default.
Hopefully this helps!