This option, found in the Maintenance pane, rebuilds the LaunchServices, which means that it removes the links between documents and applications that can open them by default.
When you open a new type of document for the first time, you are presented with an alert message. You then have three options: allow your document to be opened by the application to which the operating system defaulted; let the Finder display this application in its surrounding subfolder; or cancel opening the document. After being opened a first time, the link between this type of document and the application that opened it is stored. Also stored are all installed applications, your choices of specific applications to open specific types of files, as well as your choice of a default web browser.
After rebuilding, double-clicking files or web-links may call unexpected applications. To change that back to your preferred settings, select a file of the desired type in the Finder, choose File > Get Info (Command-I), select the application that you prefer from the list of available choices in the Open With menu, then click Change All to tell the Finder that all similar files shall call that same application. The default web browser can be redefined in any browser's preferences pane. You can Rebuild LaunchServices to correct miscellaneous issues: duplicated display or appearance of deleted applications in the shortcut menu's Open With command, incorrect icons for certain files and folders, or opening of the wrong application upon double-clicking a document.
Warning: Rebuilding LaunchServices takes quite a while to run. Wait for the task to complete.