The Pattern dropdown simply allows you to select from the library of designs stored in the library.
 

The Layout Button is the graphical method of arranging Size - Spacing settings as displayed below.
 

Combination Split allows you to select combinations of satin and tatami stitching.
 

Size X and Y are the width and height of the pattern  selected.
 

Spacing by Column and Row sets the space and offset distance between each pattern.
 

Stitch Settings are the same as tatami settings.
 

I find the easiest way to adjust these settings is by using the Layout button as mentioned above.

 

Read this article and view the associated video