These settings control the default permissions for directories that you add to the image, as well as for any directories that the tools create when you build your system. For example, if you add /usr/bin/ksh to your system, the IDE automatically creates the usr and bin directories. (For more information on permissions, see the Managing User Accounts chapter in the Neutrino User's Guide and the chmod entry in the Utilities Reference.)
Note that the values for permissions are given in octal (e.g. 777, which means the read, write, and execute bits are set for the user, group, and other categories).