The section category list is a kind of menu list where all your sections and categories are in.
You can open and collapse them by pressing the Plus Sign.
When clicking on a Section or Category link you will go to that section or category and the page will show all articles in that section or category.
You can see a demo here.
There is a Major Joomla! 1.5 bug in where you cannot use SEF when opening a content section or category URLs. The URL to the Section and/or category list is wrong. Joomla! did not solve this problem yet. (bug tracker :http://snurl.eu/pxbwp)
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