Last.fm mode (aka LFM mode) is where this application is set up to obtain all of your track plays from your Last.fm account. There is no requirement that you have Sonos equipment in this mode.
The other mode is SPY mode (Sonos PlaYs), which is where you get your non-Sonos plays from Last.fm, but your Sonos plays are obtained directly from the Sonos zones themselves.
The Install facility will default AlbumPlays into Last.fm mode.
Sonos owners: LFM mode is a subset of Spy mode. You should configure for LFM mode, and read the seed the database section, even if you do intend to move onto SPY mode, as these sections cover concepts and tools which will also be required in Spy mode.