Re:
Hello,
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.