lets see if i can answer ur query's...
lets start with basics, this is going to be a lengthy explanantion, plz bare wit me

to apply any profile option, u have to navigate through systadmin-->profiles---> system.
then you have different options to select from like site, resp, user etc...thenu have profile which displays lov of different profile options.
now if you mention a specific responsibility name in "responsiblity", and give option as "gl set of books name" and then click on find, a new form apears where u are allowed to enter the name of set of books under "that" responsibility.
Now, it is clearly evident that, every profile option has its own promininace and its own "charecteristics" which upon assigning at a purticular "level" (here level refers to-->site, resp, user...), will be influenced.
lets take example of another profile option: "HR: USER TYPE".
when you folow the above procedure and click on find, you are allowed to define "user type" under you resp level.
u can find three types of user types when u click on the lov, i.e hr and payroll, only hr, and only payroll.
if you select only payroll, the user who is using the specific resp, under which u have deifned this profile option,will be only able to view or modify payrolls. he/she cannot use/view/modify any hr information.
if you assign this profile option at site level (infact any profile option), the impact will be on all other levels like application, resp and user.
if you asign this profile option at responsiblity level, then the impact will be on that resp and any user who is using that resp, its server and org so on.
if assigned to a user, then the impact will be only on server level and org level.
hierarchy: site--> application--> resp-->user-->server-->org
its the downward flow (impact cannot crawl upwards)
with this we can understand that, profile options are used to define the functionality, charecteristics of a site, application, user, resp etc.
not every profile option is mandatory.
profile options are for security purpose "also" (depends on profile option)
the usage of profile option depends on the "clients" requirements.
i hope this helps you..thnx buddy i culd revise what i hav learned today.[:)]
regards
harsha