"CALCULATE CONSERVATION BASED ON A 20/7 LETTERED ALPHABET"
Conservation scores may be calculated using either the frequency of residue types represented by the standard 20-letter amino-acid alphabet, or a grouped 7-letter alphabet. In the grouped alphabet, residues belonging to a common physico-chemical group are grouped together under a single letter.
"DISPLAY OUTPUT USING A: 20/7 LETTER ALPHABET"
Here the output is displayed using either the 20-letter alphabet, or the 7-letter alphabet.
"USE/DON'T USE PRIORS IN CALCULATING INFORMATION CONTENT"
The use of priors in information content calculations is one of those tricky issues that basically depends on what you mean when you want to know the the conservation of a position. If the question is: "How conserved is amino-acid X in position j?" then you should not use priors. However, if the question is "How conserved is amino-acid X in position j, given its background distribution?" (or in other words: "how surprised are we to see X in position j?") then priors should be used.
"Final position status determined according to first-and-last / plurality"
Here you set the method by which it is determined in the final consensus whether a position is conserved or not.
First & Last: this means that a position will be marked as conserved if it is conserved in the first PSI-BLAST iteration and in the last PSI-BLAST iteration
Plurality: this means that a position will be marked as conserved by a vote. If a given number of PSI-BLAST iterations mark it as conserved, then it is conserved. The number is user determined, in the next field.