It's the path from which permissions are checked. If it's not established, all system file is checked. Leave 'Use Default' unless you know what you are doing. THIS OPTION APPLIES BOTH FILE MANAGER AND FILE INTEGRITY.
Put here file/folders exceptions to file permissions checking.
If this option is enabled, all files included in a folder exception will be also exceptions. For example, if the set /var/www/cli as an exceptions, all files included in this directory will appear as exceptions. By default it's stablished to No because of performance.
If this option is enabled, all exceptions will be stored in database. This is more secure but more heavy. If you have a large site and all your files under your strict control, you can disable this option.
Method used to change file/folder permissions:
chmod (default): tries to change permissions using php chmod method.
ftp: tries to change permissions using Joomla ftp configuration ( Site --> Global Configuration --> Server --> FTP Settings).
To change file/folder permissions using chmod, Apache has to be the owner of file system.
Delete log file created every time Repair option is launched. By default is stablished to Yes, so a clean log file will be created.