This feature in documents allows you to make certain fields (text box, checkbox, or initials) optional or required for the signer to fill out when you are requesting signatures. You would need to select the field and select the notepad.
Fill Out Now: means that you, the person programming the form, will add content to the field before sending it out for signatures. This content will then appear on the form that is provided to the signer.
Optional for Signer: means that the first signer will be allowed to add content to the field, but it is not a requirement for submitting signatures.
Required for Signer: means that the first signer must complete the field while signing and will not be able to submit their signatures without doing so.