By default, all the entries in a Form will be displayed in the Report. By setting criteria to the report, you can create report for specialized reporting needs. For example, in a Sales Database, display only the sales made in a specific region or in an Employee database, display only the employees who have joined on a particular date. The Criteria can be set from the GUI or by writing Deluge Script.
You can also apply complex criteria using the option Add Condition Subgroup. For example you already have a list of employees who joined on 01-Feb-2012 and who does not belong to the Payroll department. Now you can further filter the data to get a list of employees with a particular gender. To do this, set the condition subgroup as shown in the screenshot below. You can use AND/OR operator as per your requirement.
The criteria specified in the GUI will be added to the view definition. You can view the definition by selecting Report Settings -> Definition. For example, the screen-shot given below is the view definition of the view named "Employee Joined on Febraury" whose criteria we defined in the GUI.