“Would you like to reset the device to its default settings?
(This ensures that your project’s network settings are set in the device.)”
What exactly does this option do? Does it overwrite some area in the flash memory that is not overwritten when uploading a software image?
In file dialog.c in your platforms directory look at function NAConfigureDialog(). You’ll see that it calls function customizeUseDefaultParams(). That uses a combination of information from Digi defaults and information from your appconf.h (in the application) to build board params. At the end of the dialog, after you have had a chance to update the available fields, all that info is written to flash.
This IS a different area of flash then where the image goes. In fact the image, when successfully booted up, reads this area for networking and other info. Where in flash this information is written is dependant on the setting of manifest constant BSP_NVRAM_DRIVER in bsp.h in your platforms directory under the bsp directory for your particular platform.