From my understanding of it - you eneter javascript in here.
Code:
if (product_option('Cover').selectedIndex == 1)
{ alert('You have chosen Hard cover for this product'); return true; }
The code that they have added in as an example is related to a product option that is named 'Cover' and if the customer selected the first in the list it will bring up an alert box saying "You have chosen Hard cover for this product".
Never used it myself and would certainly not try to explain it to a client using xcart, but can be useful sometimes I am sure.