The title is confusing but I didn't have a good single line description. Let's say you have the following iteration tree defined:
- ->Release v1
- ->->Iteration 1
In the admin iterations screen, you select "Iteration 1". If you assign a feature to "Product" or "Iteration 1", it'll show for the root backlog view (no filtering or choosing iteration or area.) If you assign to "Release v1", it doesn't show.