We use this to load our songs into Jaikoz, selecting the option will start a file browser that we can use to select the folder(s) we want to load songs from. By default files within the subfolders will also be loaded but you can disable this by deselecting Preferences:General:Base Folder:Include Sub Folders when searching for Songs .
The Guess where to split folder into Base Folder option means that Jaikoz decides how to split the folder path. This becomes more important if we want to use the Correct Sub Folders from Metadata action because this only modifies the folders that are in the Sub Folder field not the Base Folder field
Jaikoz first looks to see the folder path contains an already registered Base Folder in Preferences:General:BaseFolder list. If not it tries to split folders so that metadata that matches such as Artist or Album are placed in the Sub Folder field, and those that are general names such as Music or My Files are placed in the Base Folder field.
Alternatively we can set the split between the Base Folder and the SubFolder ourself using Specify the number of folders above this selection to set the Base Folder to option. When set to zero the path selected will be set as the Base Folder (any other folders below will be set as the Sub Folder), as the value is increased more of the path will be put into the Sub Folder field and less put into the Base Folder field.