That option keeps your documents, pictures, music, videos - whatever is in your user folders:
/Users/yourusername/Documents
.../Downloads
.../Pictures
.../Music
.../Videos
It does not keep programs, which will have to be reinstalled
If you choose to delete everything it will give you another choice, just delete files or "fully clean" drive. The latter is more useful if you're going to sell the laptop or pass it on and don't want your stuff to be seen but it takes much longer due to the secure erase.