More info on reading page in wp-admin
|Reported by:||driz||Owned by:||jane|
If you're using WordPress as a CMS and therefore require a static homepage using a WP Page you choose this is the reading panel, but you also select a posts page but this is conditional as you might not have a posts page and might instead using category archives to create different sections such as a Blog and Portfolio.
There should be some sort of short explanation between the two drop-downs just above where it says Posts page: that says something along the lines of "Optional: Only select a posts page if you only have one type of content e.g. Blog)