I was looking trough settings since I've upgraded to iOS 10 and noticed that settings to disable erasing all data after 8 failed passcode is greyed out on enable setting and I cannot disable it or click it. Same with removing passcode I cannot disable it as well. My wife keeps entering passcode to lock off my phone to stop me using it sometimes (more attention to her) or friends do the same just to annoy for having an iPhone (apple haters) so I don't want this feature but I cannot disable. Tried googling it but all I find is how to enable ... I simply cannot click it to disable..
This may be caused by having an Exchange server configured in Mail (which can override some security settings).
All you have to do is go to your mail accounts and delete the exchange email and you can switch it back off
I strongly assume this is it, and its MS way of hijacking what you should have full control over. (Exchange server admins can force security settings on devices if the user wants to use that account on their device.)