Problem using CiviMail with Bluehost
VERP is not optional in CiviMail, the two lines you comment out are the one needed to be able to identify who was the recipient, so if it bounces, Civi can identify it properly.

If you don't process bounces, you will not know if an email is invalid, and you will keep sending emails to invalid emails. It's something mail servers really don't like, and one of the sure way to get you categorised as spammer and blacklisted.

If you have developer skills or budget, you could add a feature to handle the bounces not based on the email the bounce returns to (VERP), but on an extra field added to the header as discussed here

However, switching to a better mail server is usually a cheaper alternative than developer's time, especially if the result is likely to be less efficient as identifying bounces.

As for the civimail component setting:

Track replies using VERP in Reply-To header
- If checked, mailings will default to tracking replies using VERP-ed Reply-To.


It isn't about bounces (not having VERP isn't an option), but for what's happening when a recipient replies: should it go directly to civicrm and be processed there or should it bypass civi and go directly to the inbox of the sender?