What you're doing is telling it how to replace the colour you picked as the screen colour within the area known as the "spill area".
There is a boarder around the image +- a few pixels where it will operate. It's going to replace the green or blue with whatever you have chosen as your desired colour. The blending mode is going to be either hard colour or soft colour depending on this setting.
The technical math behind it beats the pants off me but the short end of it is that you're cycling two different blending modes to mix the colours to get a harder or softer result.
"Source" is basically saying to do nothing and leave it alone.