One of the reasons I love teaching our Intro to Reports class is that I learn something every time, without fail.
The last time a student asked me what the text and picklist on the bottom of a report meant, and I answered, “I have no idea!”
I now know both what it is and why I didn’t know before – it’s an undocumented feature that doesn’t appear in either Google or Salesforce Help search results.
If you look on the bottom of a report (Summary and Matrix, but not Tabular) you will see the text, “Check rows to filter, then drill down by:”
As far as I can tell, this replicates the “Summarize information by:” at the top of the report, only in completely different and obscure language. Basically, you can happily ignore it and stick to the functionality at the top of the report.
[the first comment on this post expands the explanation even more]