This Source Node option allows you to work on every image in the Library.
All Images will simply pass every Version in the Library to the rest of the workflow.
Tree Structure will loop down through the structure of the Library for as many levels as you set, looking into Folders, Projects and Albums.
The organisational structure of the Library will be passed on to any export actions, so a Version in Project "Example"/Folder "This is a folder"/Album "Final level" would be exported to a "Example/This is a folder/Final level" sub-folder structure in the destination folder.
If Go into Projects is unchecked, Aperture Assistant will stop at the top level of each Project instead of going into all the Subfolders and Albums. If it is checked then only Albums in the Project (and not the Project itself) will provide Versions, but this will potentially mean processing Versions more than once as they can be in different Albums.