Windows hosting: What is the effect of Web Writable on a folder?

[Geek]

Recently I've been troubleshooting an issue where upon attempting to upload an image for a WordPress post I've gotten an error that the content could not be moved to the wp-content/uploads/[year]/[month] folder.  Researching the error online showed lots of ways to fix it...using Apache.  I couldn't really find anything related to fixing it on a Windows host.  
Poking around my GoDaddy Windows hosting I found that the folders in question (wp-content/upload) didn't have the "Web Writable" option in their "Privacy" settings.   After enabling "Web Writable" I was able to upload files again.  But the description of the option is rather vague as it only says:

• Web visible Directory contents are visible to users.
• Web writable Applications can write to this directory

One would assume that "Applications" in this case means WordPress / the web server itself.  But can someone confirm that?  Did I just open the folder up for the world to write to it or just the WordPress application?  If I had access to the actual folder permissions I could confirm / fix this in a second, but the vague language in the web interface is confusing.

Thanks in advance

P.S. In regards to this question forum itself: Why even have a "Label" field for new posts if you're ONLY going to allow specific labels / tags?  Sheesh.

[Heather · Accepted solution]

Hello @Geek!

Thank you for posting. Great sleuthing there! Yes, you're right. You've given the WordPress application the rights to write to that directory with that setting. This will only give applications installed to your hosting account this access. 

Regarding post labels, you should be able to type anything you want in there. What happened when you tried? 

[Geek]

Thanks for the confirmation Heather.  As for the labels, anytime I typed in a label it would tell me that label "isn't available here" and I could only pick from the list of pre-selected labels.