Null-input statements determine how NULL parameters in functions are handled by the SQL Engine.
RETURNS NULL ON NULL INPUT | CALLED ON NULL INPUT

where

RETURNS NULL ON NULL INPUT
Specifies that the function returns NULL if any of the parameters are NULL. This statement is intended to allow the SQL Engine to skip evaluation and imply the results as NULL, which can improve performance and simplify logic.
CALLED ON NULL INPUT
Specifies that the SQL Engine evaluates the function even when one of the parameters is NULL.

This statement is not required. The default is CALLED ON NULL INPUT.