" Frankly, this entire window is a user-interface disaster. And we haven't even mentioned the checkbox to the right of each label. Can you guess what those do? (No, there's no tooltip when you hover over one.) I'll spoil the surprise. When that box is checked, it means the Tag appears in the Finder sidebar; unchecked means it doesn't."

I think he overlooked the text right on top of the menu, which says "Show these tags in the sidebar:". Pretty obvious to me.