What is "Use gift(s) in condition of other gift on cart rules"?

This is an option in the condition section of Gift on cart rule. The option is only used in case you use multi rules.

Example: You want to have 2 rules.

Rule1: Buy 2 product get free gift A. At this rule you check the option "Use gift(s) in condition of other gift on cart rules"

Rule2: Buy 3 product get free gift B.

Then if an customer buy 2 product, he will get product A is free. SO now in the cart there are 3 product (include A) so the rule2 is satisfied, then customer also get free gift: B.