In some circumstances it is useful to be able to distinguish between table entries that are live, and inactive table entries that are present only because they belong to historical data. The inactive table entries need to be present so that historical data is displayed correctly, but they shouldn't be used when creating new data.
If you want to flag some of the table entries as inactive, create a field to hold this information (a one character field) and then choose that field in the Inactive Table Entry indicator drop down.