The HTML elements are put into two packages, which can be loaded separately. You choose which package you want with this menu. When you change package some items in the HTML menu are disabled or enabled.
HTML 3.2 and CSS - Contains everything in HTML 3.2 as in the recommendation by World Wide Web Consortium released 14 January 1997. This is the latest official specification of HTML. This package also has support for Cascading Style Sheets level 1 as defined in the W3C recommendation released 17 December 1996.
There is one thing which neither of these two recommendations specify and that is which elements have the three attributes CLASS, ID, and STYLE related to CSS. To find out that I have looked in the draft for HTML 4.0 from 17 September 97. This is a draft and may change in the future.
Extensions - Contains everything in HTML 3.2, CSS, and Netscape's and Microsoft's extensions to HTML.
Hide CSS attributes - Hides the attributes CLASS, ID, and STYLE.
Hide Netscape only - Hides the elements and attributes supported only by Netscape.
Hide IE only - Hides the elements and attributes supported only be Internet Explorer. This should always be checked. You don't want to use Microsoft's extensions, do you. ;-)
The word 'only' is perhaps not completely correct. I should rather say 'supported by Netscape but not by MSIE' and vice versa. I know there are other browsers but these menu items are supposed to help you to hide those wich are not supported by either of the two major ones. Anything which can be found in the HTML 4.0 draft is not considered to be a Netscape or MSIE only element or attribute.
Read more about hiding attributes on the page about deciding which attributes to be asked about.