"Special Options" is basically the "safe mode" for chumby.  It's a separate storage partition, with its own file system.

Basically, the chumby will boot into that mode under a couple of circumstances - you have the screen pressed when you power up, or your shut the device down while it was still booting, or perhaps the main partition is corrupted in some manner.

If you accidentally get into that mode, you just need to hit the "restart to normal operation" button amd the chumby will reboot back to normal.

However, the "Special Options" mode can be use to install firmware updates, either from the network or a USB dongle, or reset the factory settings (useful if you miscalibrated or the network settings are messed up).