A sitemap file helps search engines understand the structure of your website. If you do not create a sitemap, most engines will be quite capable of figuring out your URLs for themselves, but in general they consider it a big plus if you supply one.
The first thing that BF SEO does is check to see if you have a sitemap.xml file in your website root. If not, you have the option of creating one.
As the structure of your site may change regularly as you add and remove menu items, the sitemap.xml file BF SEO creates is a static index, that points to a dynamically generated XML sitemap.
BF SEO creates a basic sitemap only, and gives you the choice of which menus you want included and which you do not.
You also have a choice of categories, and if any are ticked every article in that category will be indivually listed.
If you have more sophisticated requirements, there are dedicated Sitemap components you can find on the Joomla Extension Directory that will allow yu to create a more complex and customised sitemap. BF SEO is aiming to just create a bare minimum basic sitemap quickly and easily for sites that don't have one currently. The sitemap feature is optional, you can use a different dedicated sitemap extension if you prefer.