The "Drop to convert to Apple Music/ iTunes Library" option will allow you to transfer media files such as video and audio files to Apple Music/ iTunes Library on your computer.

 

With the ‘'Drop to convert & add to iPhone" option will allow you to transfer media files such as video and audio files to your iPhone.

With 'Drop to convert & add to Local Folder' option you can convert files into Apple-friendly formats. Simply drag & drop to convert media files locally & save them to your internal or external drive as readable formats that Apple “respects”.