When using the Magic Wand tool, the Contiguous check box relates to how the new selection behaves. A contiguous selection will select the entire range of pixels based the tolerance setting and the physical location of the pixels. Having this option checked means that only the pixels that lie next to each other (contiguous) will be selected. Unchecking this box means any and all pixels that lie in the colour range will be selected regardless of where they appear on the canvas.