The blue button is used for creating images. Enter the image name (this name cannot contain spaces).
When OK is clicked, the Edit Image dialog pops up where the image properties can be adjusted, and the image is added to the list of modifiers.
To assign an image to a given surface, select the surface from the Material surface properties list and click its Modifier field. A drop-down list of all available modifiers in the project will appear. Select the image you wish to apply to that selected surface.
The red button will delete the selected Modifier and any materials which reference this modifier will revert to the Void option.