Preferences contexts allow to ensure that correct Application-Under-Test preferences are applied before test execution.
This can be particularly useful when preferences which control the behavior of pop-up dialogs are being set in your AUT.
The well-known example, while not completely relevant to test execution, is the Confirm Exit dialog, which has the "Always exit without prompt" checkbox.
The Preferences Context editor displays tree of all available preferences and allows modifying/removing some of their values.
Move a mouse over highlighted areas on a screenshot below to get a documentation regarding UI elements