It is for permissions and preferences that are set up on a per-site basis. For example you can set a preference to allow pop-ups for one site whilst by default they are blocked on all other sites.

If you clear the site preferences then the Firefox default settings will be used.

Clearing "Site Preferences" in "Clear Recent History" will remove exceptions that are stored in content-prefs.sqlite (site specific settings for zoom) and permissions.sqlite (exceptions for images, cookies, pop-ups, software; Tools > Page Info > Permissions) in the Profile Folder.

The password exceptions (Tools > Options > Security: Passwords: Show Passwords) are also removed from signons.sqlite.