It is typically reserved for use in a Menu like the "Menu" container. If you use it somewhere else, it will create a list of a single entry.
Specify which section of your blog you want this widget to link to such as your blog home (default setting), archive directory, category directory and others. In general the name of each available option is self-explanatory, however here is the full list of them:
Front Page: link to the home page of the current collection (disp = front).
Any item (post, page, etc...): link to a specific item. It will be visible only if the parameter Item ID is not empty and its value belongs to an existent item in the site, no matter if it is in a different blog / collection. (disp = single or disp=page, depending on the entered Item ID.)
Archive directory: link to a list with all the months which posts have been issued (disp = arcdir).
Categories: link to a list of the available categories in the current collection (disp = catdir).
Post index: link to an index of all posts in the current blog/collection (disp = postidx). The title of each item is displayed in that list, and each one of them links to its full view (disp = single).
Photo index: link to a page that displays all the pictures attached to the items that belong to the current collection (disp = mediaidx).