It's a tool that you can use to pick colors, an easier way of doing the same is to drag the color selector, but the picker will show you a more detailed result, and with customizable settings!
The picker automatically switches back to the last tool you used after you use it.
Defines whether the picker will pick colors only from the current layer, from the ones above, the ones below, or all layers! The difference between mixed and separated, is that if one layer has a semi-transparent color, the mixed mode will mix it with the colors below it before passing it to the picker, where the separated mode will get the color as is.
If this option is set, the picker will set the opacity while picking. Otherwise it will ignore the opacity completely