There are only three settings here:
Back up my data. This setting backs up your Droid 2 settings and data to Google’s servers so that if you have a problem with your Droid 2, you can restore the settings and data at some later time. Obviously, if you don’t feel safe with your data riding an anonymous server somewhere, turn this option off.
Automatic restore. If you uninstall an app, and then later decide that you want to install it again, if you have this turned on, the Droid 2 automatically grabs the relevant data you’ve backed up using the “Back up my data” option and puts it back on your Droid 2 when you reinstall the app.
Factory Data Reset. If you’re getting rid of your phone, you don’t want anyone else to get all your data. Tap this button and then follow the onscreen instructions for setting the Droid 2 back to the way it was before you began using it. It deletes all your data, eliminates any changes you made to the phone, deletes any apps you’ve installed, and makes the phone look and work exactly the way it did when it was shipped from the factory.