The Options tab contains an option that lets you configure a different background image on a per-folder (or Content Type basis). The images themselves are defined through Preferences - Display - Images.
Other options available here depend on the type of format you are editing. For normal folder formats the only options are to automatically calculate folder sizes and to use this format as the default for all sub-folders. For Content Type formats you can specify the Content threshold - this defines when the content type format will be triggered. For example, an Images Content Type format with a threshold of 25% would be triggered if 25% or more of the files in a folder were images.
Include columns from other matching formats comes into play if a folder is matched by multiple formats (for example, it may match a content type format but also have a defined format saved for it). In this case, the over-riding format is used initially, but then any additional columns that have been defined in other matching formats are also added to the display.
The four tabs in the Folder Options dialog all have Reset Page buttons which let you reset the page contents to the default or Custom settings, or one of your defined Favorite formats. Also note that when you are editing a Folder format, a Content Type format, the Flat View format or a Favorite format, the individual sections of the Format editor are able to be turned off. This lets you define a format that only specifies some settings while leaving others unchanged. For instance, you may wish the Content Type format to add some additional information columns, but not change the view mode. The default Flat View format is set up to add the Location field to the end of the list but leave all other settings unchanged.