The dropdown lets you select the language of your target audience (or at least I find that the easiest way to think about it). If you select "English" then only people who select "English" in their settings will see that post.
But because most people leave their settings at the default "Undetermined" those people won't see a post that's marked as "English".
So for the moment, the best practice is to just ignore that dropdown and leave everything as "Undetermined".
The warning banner looks to be duplicated from the Settings page, where it actually makes sense.