From BlenderWiki

Options

This panel provides a series of control options concerning how objects using this material will appear in the rendered image. All controls are default "Off" unless otherwise stated.

Traceable (default On)

Include this material and the geometry that uses it in ray-tracing calculations. See Transparency for details of ray-tracing.

Full Oversampling

Force this material to render full shading/textures for all anti-aliasing samples.

Sky

Render this material with zero alpha, but with sky background in place (scanline only)

Use Mist

Use mist on this material (see "World Settings" for more details)

Invert Z depth

Render material's faces with an inverted Z buffer (scanline only)

Z Offset

Give faces an artificial Z offset for Z transparency.

Light Group

Limit lighting to lamps in this light group.

Exclusive

Uses the light group exclusively - these lamps are excluded from other scene lighting

Local

When linked in, uses local light group with the same name.

Face Textures

Replace object's base color with color from UV map image textures.

Face Textures Alpha

Replace object's base alpha with alpha from UV map image textures.

Vertex Color Paint

Replace object's base color with vertex paint colors (multiply with 'texture face' face assigned textures)

Vertex Color Light

Add vertex paint colors as additional lighting. (This can be used to produce good incandescence effects).

Object Color

Modulate the result with a per object color

UV Project (default On)

Use to ensure UV interpolation is correct for camera projections (use with UV project modifier).

Pass Index

Index number for the IndexMA render pass.