Pass - I don't want this item to use and I also don't want it to sell.
Greed - I intend to sell or auction this item.
Need - I will USE this item. You WILL NOT SELL IT. (Some groups may wish you to equip it there and then, some groups will just trust that you will make use of it after the instance.)
Just one last point on "Need", your character really should be able to use it there and then, also "needing it for the money" is not need, that is the greed option.
group: the oonly people who can loot that corspe are the person next in line on the round robin thing
round robin: same as above but no rolling screen
need before greed: only if you caracter can use it like for instance a mage cant roll on a plate helm while the loot is n before g
free for all: name says it
master loot: only the master of the group can loot items