The Project Reference Coordinates page in Didger's Image Registration and Warping dialog allows you to calibrate an image according to locations that already exist in your project. This is designed primarily for people who do not know any real world coordinates on their image, but know exactly where it is supposed to be placed in their project (ie. want to calibrate their images based off locations in imported DXF, SHP, or other vector or data files). The window shows their existing project, and allows them to pick points in the existing project to use as calibration points for the image. It is just a different method of calibrating the image.
For example, you may have polylines and polygons of roads/buildings imported into your project via a SHP or DXF file. Then you want to import an aerial photo, but you don't know the coordinates of the aerial photo to calibrate it. So you can pick out points in your existing project (say where two roads cross or the corner of a building) on the Project Reference Coordinates page and tie those points to the corresponding location on the image (you can see the roads or the buildings in the aerial photo) on the Source Image page.
Usually, when using Project Reference Coordinates, using the Dual View is probably the best so you have the Project Reference and Source Image windows side-by-side. For exact instructions, please see the Image Registration and Warping topic in the Help.
Updated June 8, 2018