To install AmigaOS 3.5 you need a CD-ROM drive. If you have done a pre installation on a partition that has no CD-ROM driver you will have to install a CD-ROM driver to that partition using this option.
The installer script will ask you which partition you want to install the CD-ROM driver to. This should be the partition you want to install AmigaOS 3.5 to. During the installation you have to set some options. If you are unsure about one option please read the help text that you can show using the "Help" button.