Reading Section Confusion

I am at the end of the section called " WordPress Theme Functions" I pretty much understood the stuff Zac covered. He covered it very well. To be sure I understand up to this point I decided to take site idea of my own and apply the principals I am learning here. Basically a mimic site on my own. I am stuck understanding on thing. I have got every thing to work except one thing; that is in the admin Settings -> Reading for Zac's training I have to set the Post Page drop down to Blog for everything to show up. On my mimic site I have to set it to nothing (I am using videos where Zac used work) to get it to show up. When I set it to my defined custom post of Video nothing shows. I am trying to understand what I am missing. I don't understand what is controlling this or what this is controlling. However leaving each with those setting the pages loads the content it supposed to. Does this drop down need to be in sync with something else or is there a setting in my *.php files I could of missed? Thanks