This module allows reference fields of several types to have their widgets' available options limited by the values of other fields in the current entity.
This is best illustrated by examples:
Example 1: countries and cities
Suppose you want to label articles (or products, or businesses, etc) by both city and country so both can be used for filtering and searching. You could use a hierarchical taxonomy with city terms as children of country terms, but that doesn't make sense when you come to set up Views filters.
With this module, create two separate taxonomies for country and city (or content types, or whatever entity you want to use). Then add a reference field so that each city points to its country: eg, the term 'Paris' has a reference to 'France'.
Then when editing an article, selecting 'France' in the country field will cause the city field to update to show only cities in France.
Example 2: sports and teams
Suppose you want news stories to be marked as being about a sport and a particular team for that sport, perhaps using taxonomy terms for both. To make editing easier, you would probably like want the 'team' dropdown to be limited to just teams for the current news story's sport.