Hi and thanks for your question
First of all, this setting is optional. The agent also works when you don't set it. The main thing that is does is that the agent can distinguish between application code and library code. That means that the UI can collapse the stack frames of library code and highlight the stack frames which are originated from your application. See also the span timeline documentation.
Additionally, it allows the agent to be a bit more efficient on which classes to scan on startup so setting the value can increase startup performance.
The proper value of this setting depends on your project. Most Java projects have a root package. For example
com.myproject. That would also be the appropriate value for this option. Note that you don't have to configure sub packages, just the root package.
Let me know if you found that information useful