it basically means how much you want to roleplay or how much you like action
if you dont like conversations and roleplaying, choose "Action". You will dive right into the experience and will focus on fighting and action, not on talking
The default setting is "Roleplaying" which gives you a good combination of action and RP
Or if you are a casual gamer and mostly interested in the story, choose "Story". This makes combat easier and lets you enjoy the story more
see also:
Mass Effect 3 Character Creation Guide
