Your identification keeps some data for each person you communicate regularly with in its peer data structures.

Notify is one of those. It keeps the current state of friendship you have (in/offered, out/pending or notify) and whether you are notifying this person of your presence. You can control this using the /friend, /unfriend and /notify commands.

The /show notify command tells you who you are informing of your presence. /show in shows offered friendships. /show out shows pending friendships.

See also trust, expose and display.

The /cancel command lets you delete the entire record for a peer.

IRC also has a /notify command, but it's an old hack. Don't use it here.