ETags is a mechanism that servers and browsers use to determine whether a component in the browser cache matches one on the original server.
As KeyCDN explains:
Entity tags, also commonly referred to as ETags, are cache validators which help the browser determine if it can retrieve the requested resource from local cache or if it must be retrieved from the server. This mechanism helps improve loading times since if the resource can be retrieved from local cache, the browser does not need to make an additional request to the server.
For Apache servers, ToolKit fixes this Performance Recommendation by implementing the following code into your htaccess file:
Header unset ETag
On NGINX servers, performance plugins are not able to automatically make server-level tweaks. Also, by default NGINX servers already have ETags enabled. However, when NGINX servers use server-level compression such as GZIP or Brotli, ETags are often times disabled and ignored.
On LiteSpeed Servers, Entity Tags can be enabled via your server configuration settings. For more information, check out their documentation here.
Want to learn more about Entity Tags?
Check out this awesome explanation on Etags and how it works
See default NGINX Etag settings here