Here is the first configuration screen.

Can I help to reproduce the issue or provide any files?

I suspect this is an unused resource copied out of another game made from the same developer.

There is no mention of shadows in the readme, but every other setting is described.

dgvoodoo does prevent the anti-aliasing setting from being available though.

I had the game when it came out, and I distinctly remember the shadows under the dots. My memory may be bad, but I think it's supposed to have them as part of hardware TnL. It's also a little fishy that it's right under "dynamic lighting," which should include shadows.

Now, what may have happened is it was an Nvidia, or 3DFX Voodoo, specific hardware feature. MDK2 has custom Nvidia features that don't work any longer. So while MDK2 had hardware TnL, it was with custom direct access to Nvidia hardware. It was one of those "The way it's meant to be played" things. Giants: Citizen Kabuto liked to run on contemporary Nvidia hardware, too. It was a whole different ball game if you played it on an Nvidia card, and I remember when the bump map drivers for other vendors caught up, and it still looked nothing like, or as good, as running it on Nvidia.

Also, I'm 55, so it's on brand that maybe I'm just not remembering how a 25-yo game ran in the first place.

I've shot the games graphics dev a question on the option.