Off by default, behind SUBSCRIPTION_AUTOMATIC_TAX. It has to be switched on in the Stripe dashboard too, and Stripe rejects a subscription when automatic tax is enabled on only one side, so flipping the flag alone will break subscribing.
All the flag does on the API side is add automatic_tax to the checkout session. Stripe then taxes the first invoice and every renewal after it. Nothing is calculated or stored locally, and the tax shows up in the session total the client already reads.
Tax follows the customer's location, so it needs an address. With automatic tax on, Stripe refuses to create a session for a customer who has no address when nothing in the session collects one. That's the reason the session asks for the address and copies it onto the customer at confirm, which is covered in Subscribing. The renewals need it sitting on the customer for the same reason, since they calculate tax from it with no one at the keyboard.
The other way an address arrives is the payment method page, which writes it to the customer directly. That path asks Stripe to validate the location straight away, so an address Stripe can't place in a tax jurisdiction is rejected there as address_invalid, while the user is still looking at the form. Otherwise it would surface later as a subscription that fails to create.
Nothing about the address changes. The session decides whether to collect one from the card on file and not from this flag, so the address is still collected, it just isn't required for anything.