When this button is selected the lists shown in the master pane list are lists stored within your device and available to be synchronised with iCloud. The button will be called "Cloud folder" if iCloud is available to the device, an iCloud account is logged in to, and use of iCloud has been activated in the ListHolder application. Otherwise the button will be called “Second folder”. Please see the “iCloud related” section of these instructions for further information about synchronisation priorities.