Keywords in Subversion are used to embed versioning information into text files under version control. These keywords like (for instance, 'Id'), are expanded for resources that are marked as using them, and this is what the "Add keywords" action does.
First, the user selects the resources that need keywords added - this may be a folder in which case all the contained (child) resources are also affected. Second, activate "Add Keywords" and choose which keywords to use.
To use the keyword in a (text) file, enclose it in $-signs, as in $Id.