Enables the use of local type inference in declaring variables.

What is type inference?

You can declare local variables without explicitly stating a data type. The compiler infers the data type of a variable from the type of its initialization expression.

Option Infer On:

Dim aString  = "1234" '--> Will be treated as String by the compiler
Dim aNumber  = 4711   '--> Will be treated as Integer by the compiler

vs. explicit type declaration:

'State a type explicitly
Dim aString as String = "1234"
Dim aNumber as Integer = 4711

Option Infer Off:
The compiler behavior with Option Infer Off depends on the Option Strict setting which is already documented here.

• Option Infer Off - Option Strict Off
  All variables without explicit type declarations are declared as Object.

  Dim aString  = "1234" '--> Will be treated as Object by the compiler
  

• Option Infer Off - Option Strict On
  The compiler won´t let you declare a variable without an explicit type.

  'Dim aString  = "1234" '--> Will not compile due to missing type in declaration
  

Document level

It is on by default, but you can set it by placing Option Infer On|Off at the top of the code file. The option will apply to the whole document.

Project level

You can switch it on/off via the menu in Visual Studio:

Project > [Project] Properties > Compile Tab > Option infer

Choose On|Off in the drop-down menu. The option will apply to the whole document.

All new projects

You can switch it On by default for all new Projects by selecting:

Tools > Options > Projects and Solutions > VB defaults > Option Infer

Choose On|Off in the drop-down menu.

Basically you can use type inference whenever it is possible.
However, be careful when combining Option Infer Off and Option Strict Off, as this can lead to undesired run-time behavior:

Dim someVar = 5
someVar.GetType.ToString() '--> System.Int32
someVar = "abc"
someVar.GetType.ToString() '--> System.String

Anonymous Type
Anonymous types can only be declared with Option Infer On.
They are often used when dealing with LINQ:

Dim countryCodes = New List(Of String)
countryCodes.Add("en-US")
countryCodes.Add("en-GB")
countryCodes.Add("de-DE")
countryCodes.Add("de-AT")

Dim q = From code In countryCodes
        Let split = code.Split("-"c)
        Select New With {.Language = split(0), .Country = split(1)}

• Option Infer On
  The compiler will recognize the anonymous type:

• Option Infer Off
  The compiler will either throw an error (with Option Strict On)
  or will consider q as type object (with Option Strict Off).
  Both cases will produce the outcome that you cannot use the anonymous type.

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Doubles/Decimals
Numeric variables with decimal places will be infered as Double by default:

Dim aNumber = 44.11 '--> Will be treated as type `Double` by the compiler

If another type like Decimal is desired the value which initialized the variable needs to be marked:

Dim mDecimal = 47.11D '--> Will be treated as type `Decimal` by the compiler