Basically, if you were to have a PCI graphics card and an AGP graphics card connected to the motherboard, the option in the BIOS allows you to set which graphics card should be used as the system default when the system POSTs and boot into the OS (just as Pepsiboy700 said). Also, just as you stated, the option concerns priority of multiple graphics cards (if they exist).
So, if you only have an AGP graphics card, set it to AGP.
|Desktop PC| |Macbook Air 13" (Mid 2013)|
|Windows 8.1 Pro (x64)| |AMD FX 4100 Black Edition 3.6 GHz @ 4.0 GHz OC| |Arctic Cooling Freezer 13 PRO| |Gigabyte Nvidia GeForce GTX 560 Super Overclock 1GB| |ASUS M5A78L-M/USB3 Motherboard| |Samsung 840 Pro 256GB SSD SATA III HDD| |Kingston HyperX 8GB PC3-14900 DDR3-1866| |OCZ ModXStream Pro 700W Modular PSU| |NZXT Vulcan Micro ATX Case|