This is the location of the folder containing the Graphviz executables. Graphviz is an excellent free graphing software that's used by many notable projects. Polymeter uses Graphviz to make graphs of your modulations. If you wish to display modulation graphs, the Graphviz executables are required. This option is set automatically by the Graphviz wizard when you show the Graph bar.
You may set this option manually, either by typing a path, or via the browse button. The browse button is normally hidden, but it appears on the right when the option is selected. Click the browse button to display a Browse for Folder dialog. Note that the path must be fully-qualified, and the folder it identifies must contain the Graphviz excutables, which are normally found in the bin subfolder of the Graphviz distribution.