When you send to device, if there is no suitable format for the device, a conversion is done. The result is added to the library and sent to the device. So, if you have a epub only book and send that to the Kindle, the mobi will be produced.
I don't think there are any options that affect this. There should be a prompt warning that it will happen and to confirm to go ahead. The prompt has a "don't show again" checkbox, so I assume you checked that at some point. That can be reset in the preferences, but it resets all confirmations.
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