This determines what day is the end of a pay period when you run reports for a pay period. It is also what determines when End of Day reports are sent that have "Weekly" selected for the frequency. In the image above, Saturday is selected as the end day of the week. This means that pay periods will be recorded starting Sunday and ending Saturday, and weekly End of Day reports will be sent when end of day is ran on Saturday.
All time clock records which are started before this time are considered to be a part of the previous day. It is recommended to set this time to be a few hours after you close to ensure that NO employees are clocked in. This setting does NOT determine what time separates day of sales. (See End of Day)