Sound generators have a limited amount of tones that can be played simultaneously. This is sometimes referred to as 'maximum polyphony'. When the maximum polyphony is exceeded the synthesizer will start cutting tones, which can cause audible 'distortion' to the music.
In GS equipment you can assign the number of tones (oscillators) that is assigned to each part (channel) and thereby control which instruments are 'more important'. This is what this dialog is for.