It's mainly for DLCs or bundles containing DLCs, like this, but also for some special editions which contains all games of a series.

Any time something you are giving away contains more than one 'item', Steamgifts cannot check properly if people already own it.

They will be able to activate it as long as they don't already own it all. If they already own any item though it's up to you whether or notyou want to request a new winner

Thank you.

Short answer: it's a good idea to always check, but not exactly necessary.

If a person tries entering a GA (giveaway) for a game they already own, it will usually say "exists in account." This prevents them from entering a GA for a game they already own. However, some games don't register that people own it. That issue is most common with games that include DLC, since sometimes Steam Gifts doesn't register owned DLC. That must be the case with this game O.o