Selecting which entry to act on is a common step in many Workflow activities. It's up to you to provide the logic that the workflow needs in order to take action on the right Laserfiche document or folder. 

When you carry out an activity, it will unlock even more options that you can use on your workflow, depending on which activities you have used in the workflow previously. In this example, we've talked about Output Entry and Destination. Those are all different Laserfiche entries that you can then use later on in your workflow. In this workflow, you were trying to modify that entry that you created. That's why you want the output of the Create Entry activity. When choosing Destination, you're indicating that you want your activities to act upon the location in the folder structure where the entry was created, which in most cases is a folder.

That's not the correct entry for the current workflow you're trying to build, but it could be useful in other workflows. It's hard to say when you should point to Destination specifically--it would depend on what you're trying to do. For more information on selecting entries for activities, I'd recommend checking out this help file.