I´d like to show you how it works on some concrete example. Lets take my latest photo:
Bellow you can see how the photo looks with and without Selective Color adjustment layer:
The real power of this tool lies in the possibility that you can adjust separately each color tone. In the upper part of the Selective Color Option you can choose from Colors which you want to edit. How big the changes will be depends on how many color is on your picture. It´s obvious that if you edit photo of sky, changing of Reds will be almost useless, but changing of Cyans and Blues will make huge change.
Except the colors such Reds and Yellows you can also change Whites (= highlights), Neutrals (= midtones) and Blacks (= dark tones). It can change the atmosphere of your picture dramatically. E.g. if you look at my photo you can see that I made Blacks lighter (means that I set value Black on -15%) and add reddish/magenta tone.
Let me show you how exactly I set the Selective Color. Hope that it will help to better understand this tool.
(Click to see bigger.)
The best thing you can do to became familiar with Selective Color is experiment on your own pictures.