What is the purpose of the “Prefer 32-bit” setting in Visual Studio and how does it actually work?

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It is unclear to me how the compiler will automatically know to compile for 64-bit when it needs to. How does it know when it can confidently target 32-bit?

I am mainly curious about how the compiler knows which architecture to target when compiling. Does it analyze the code and make a decision based on what it finds?

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