The Attendance Evaluation is an evaluation where instead of entering the grade manually (like you might for, say, a "Participation" evaluation), each student's grade is determined automatically from the attendance marked on this course's Attendance page. By including this special evaluation in your grade weighting, you can make your students' attendance have an automatic effect on their final grades.
Each student's attendance evaluation grade will be the percent of the total course sessions at which she was present.
This evaluation is always tied dynamically to the information in the Attendance page. If you do not use that feature to track attendance online, but still want to include a score for attendance in your final grade, you can just create a regular evaluation for that purpose.