These settings really help you control the way you handle image profiles. Either you will want to forgo the influence of profiles (no color management does everything it can to remove color influence regarding profiles -- or almost everything), manage color for RGB results (limited) or manage it for RGB>CMYK (full). Frankly, I think the descriptions are fallible, as it may be theory that doesn't work in practice.
1. calibrate your monitor
2. choose No color management.
You may want to get the ignore EXIF plugin as well.
You should do this unless you really plan to study the use of profiles, make or purchase custom profiles, and fuss with them. You have to have a good reason to use profiles...many people I talk to and work with get better, more predictable results without them. Most people read the descriptions and choose full color management as that seems the most pleasing description. by calibrating you give yourself the option to see the right thing on screeen and don't have to embed voodoo in your images.