The red box is the only one you should be concerned with when saving a DDS. You can select the following, depending on what you want to save:
DXT3 – explicit alpha – this saves out any alpha information in your DDS.
DXT1 – no alpha – the best compression to reduce file size, but does not save alpha.
Obviously, you can change the settings and it will affect the quality and output, but we would recommend leaving them alone unless you are an advanced user.
I hope this helps you guys
