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When the kernel has several packets to send out over a network device, it has to decide which ones to send first, which ones to delay, and which ones to drop. This is the job of queueing disciplines. Several different algorithms for how to do this "fairly" have been proposed.
If you say no here, you will get the standard packet scheduler, which is a FIFO (first come, first served) scheduler. If you say yes here, you will be able to choose from among several alternative algorithms that can then be attached to different network devices. This is useful, for example, if some of your network devices are real-time devices that need a certain minimum data flow rate, or if you need to limit the maximum data flow rate for traffic that matches specified criteria.
To administer these schedulers, you'll need the user-level utilities from the package iproute2+tc at http://linux-net.osdl.org/index.php/Iproute2.
This Quality of Service (QoS) support will enable you to use Differentiated Services (diffserv) and Resource Reservation Protocol (RSVP) on your Linux router if you also say yes to the corresponding options. Documentation and software is at http://diffserv.sourceforge.net.