Multidrop is used when one mailbox on the server is used to accumulate mail for more than one person. Fetchmail gets the mail to the mailbox and tries to determine who the recipients are.
Please note that multidrop does not work well in many situations -- especially if it's used with mailing lists. If multidrop must be used, then the protocol ETRN should also be used. ETRN is a protocol, in the same computer, which asks the mail server to make a connection to sendmail in order to transfer mail directly.