That controls which functions are assigned to which buttons. You have 3 buttons and 4 functions to choose from, and there are 10 permissible combinations. The default behavior is to have a half-press of the shutter trigger autofocus and metering, the AF-ON button doing the same thing (making it redundant and useless), and the * button doing AE Lock.
The most common use of this function is to set up back-button AF (where autofocus is initiated by the AF-ON button and a half-press of the shutter starts metering but not AF).
This is copied from the Canon Europe Tips on the 60D: Back button focus is a widely used Custom Function on many Canon EOS DSLR cameras. It allows you to separate out the functions of metering and focusing from the shutter button and have the shutter button only activating metering and taking the image. Setting this on the EOS 60D is a little different to on other EOS cameras â€“ it is still found in Custom Function Group IV, Setting 1, but there are a variety of settings available within that menu. If you have another EOS camera and wish to match the functions, then for the most common setups of back button focus you will want either C.Fn IV -1-1 or C.Fn IV -1-2 depending on whether you use the AF-ON or AE Lock button to activate the focusing.