The first tab, Supported File Formats, controls which audio file formats your player supports. Checkmark all formats that your Device supports. File formats involved in the synchronization process that are not supported will not be synchronized. (See Transcoding Settings).
The second tab, Transcoding Settings, allows you control if unsupported file formats should be transcoded (converted) into another file format to allow them to be synchronized to your device.
Checkmark Transcode formats that are unsupported to use transcoding whilst synchronizing.
Click here to read more about the transcoding format options.