Three options on this menu configure operation to your preference and mouse characteristics:
The "Thin Lines" / "Fat Lines" option selects one-pixel versus three-pixel wide lines when drawing contours, since I have users who strongly prefer mutually exclusive choices in this case *grin*. Click to alternate. This option setting has no effect whatever on the data saved.
The "Click-Per-Point" / "Stream Tracing" option selects whether you prefer to digitize contours by clicking once for each point saved, or by clicking once each at the start and end of the contour, and having a continuous stream of points recorded in between, much like drawing with a pencil.
The trade-off is that clicking once per point can be quite fatiguing, but works well with mice and/or hands that track less than perfectly: visual feedback can be used to get each point just right before clicking. Stream digitizing can be much more efficient, but is very unforgiving, any slip of the mouse ball or hand shows up as a glitch in the contour. I recommend Click-Per-Point for most people and mice, particularly mechanical mice.
If you are using Stream Tracing, you probably don't want a point recorded every time the cursor moves a pixel; this is far too many points for most applications. Set "Stream Spacing" to the number of pixels you would like the cursor to move before a point is saved.