The RGB color settings control the solid Reg/Green/Blue attributes of a non-photo-textured material. Select the RGB values or click the Pick... button to select a color from the color picker.
If the Blend with Texture setting is checked, the selected RGB color will be blended with the photo-texture when appropriate.
Since the Material name is shown on various dialogs and on the main toolbar Material drop down selector, it is a good idea to assign an appropriate name to an RGB material, such as the color that you selected.