This option specifies the currently selected object from the tree view panel or the object list for the object comparison. It will be the object on the left side in the object compare window if you later use the Compare with.... option:
This specifies the second object for comparison. Now the object compare window is shown:
Read all about directory object comparison in the manual topic Comparing Objects
Another, faster way to compare objects: Open the context menu directly in the treeview or object list (right mouse-click) and use the option Select for compare (left side).
By the way, you can only use this option if you are in the tree view panel or the object list and if only one single attribute is selected.