Without an eTTL-II capable flash, as you've noticed, it's hard to tell, since that menu selection remains grayed out. But, basically, it depends upon the flash, and whether or not it can communicate via the camera menu.
In terms of Canon's speedlites, the following models can be controlled via the camera menu:
Earlier models, like the 580EX, 550EX, and 430EX cannot be controlled through the camera menu, and that selection in the camera remains grayed.
There are also a number of 3rd party flashes that can be controlled via the camera menu, and the first way to find out whether or not is to look at reviews and specs of the flash. This feature may not be listed in the specs, however, so you may also need to go on a google search for user reports; "menu control" is a good phrase to search on along with the flash model name, and the PoTN forum, which is Canon-centric, has a bunch of flash gurus who could probably tell you definitively.
One additional note. A number of cheaper radio triggers (e.g., YN-622C, Phottix Odin, Pixel King, etc.) are now hitting the market that allow for TTL communication over radio, and they can take advantage of the menu control protocol to give you remote ability to change flash settings via the camera menu. This feature now has a lot more convenience than simply keeping you from having to remember custom function codes, or having to use the flash LCD menus.