Detailed explanation of the switches and options available:

Import

Create bones

Nifs only reference the bones they use, which is inconvenient for posing. With this set, all bones between the ones in the nif and the root will be created and connected. This can be used on non-humanoids if you supply the reference skeleton (see below).

Use Blender orientation

Scales down the imported nif by 10 and rotates 180d so the position and size is natural for Blender. It puts this transform on the root though, so if you're copying shapes around between imported nifs it can get pretty confusing.

Rename bones

Rename bones to be natural for Blender--left/right bones will have the same name with ".L" and ".R" suffixes, respectively. Some of Blender's tools expect bones to be named this way. This may not work well on non-humanoids.

Import animations

Import animations embedded in the nif. No reason not to use this, but not all animations are supported.

Import collisions

Import any collisions found in the nif (Skyrim only). No reason not do import them, but they can get in the way if you're just working with the mesh.

Import tri files

Import any tri files that seem to be associated with the nif, using the standard naming conventions. This is just for convenience--you can import them separately or not at all.

Rename bones as per NifTools

For compatibility with NifTools Export/Import, rename the bones using NifTools' names.

Import as shape keys

When importing several objects at once, if the objects have the same number of verts, create a single shape with the different nifs as shape keys. E.g. import Skyrim's _0 and _1 weights together and get one object with _0 and _1 shape keys.

Apply skin to mesh

If OFF, just the mesh will be imported. Useful if you're repurposing a mesh to another game or reusing it in another way. If on, any bones will be imported, assembled into an armature, and applied to the shape.

Create armature from pose position

Create the armature in Blender using the pose position of the bones in the nif. This is useful when you have multiple meshes in the nif and they came from different sources. Sometimes each mesh thinks the bones of the skeleton are in slightly different places and that messes up the import. But there's only one position for bones the nif (the pose position). If the nif isn't posed (bind and pose positions should be the same) you can use this option to get the shapes to line up.

Apply estimated shape offset

Figure out how much the shape is offset from the skeleton by averaging out the bone offsets. Gives good results on most bodyparts. It may not on other skinned nifs or nifs that were assembled from several sources.

Reference skeleton

When working with non-humanoids, provide the race's base skeleton here so bones can be created and connected correctly.