Zephyr comes with a fully functional and integrated Defect Tracking System. Alternately, it also provides full 2-way integration to other 3rd party Defect Tracking System, particularly Bugzilla and JIRA.
This tab allows you to pick one of 4 options with respect to a Defect Tracking System. Pick carefully as there are ramifications of your choice if you decide to change them later on.

Picking this option will disable defect tracking and remove the Defect Tracking icons from the various Desktops.
At a later point in time, you may pick one of the other options if you want to turn on a Defect Tracking System.
Every time a Defect Tracking System is changed, the user should logout and log back into their Desktop again.
Picking this option turns on the internal or native Defect Tracking System that Zephyr ships with. This is a fully fledged defect tracking system with its own Defect Admin application that shows up in the Manager's Desktop, access to non-Zephyr users via the Defect User Desktop and the actual Defect Tracking application that is displayed in all Desktops.
Please note that switching to another Defect Tracking System at a later stage is not recommended as data corruption might occur.

Zephyr comes with a 2-way integration to an external Bugzilla defect system. Currently, a non-customized version of Bugzilla 2.22.x is supported. While all administration of that defect tracking system continues to remain on that system, Zephyr reads and writes defects and pulls up metrics from that Bugzilla installation. When this option is chosen, a valid Bugzilla username/password that has access to all the projects being tracked is needed to fetch data for defect metrics. Each user in the Zephyr system will need their Bugzilla username/password to File and Search for defects in their own Desktops.
With this 2-way integration, a user will be able to do the following:
File a new defect in Zephyr and it will show up in Bugzilla
File a new defect in Bugzillaand search for it in Zephyr
Search defects by various fields
Update an existing defect (add comments, add attachments, change status, assigned to, priority and component fields)
Update multiple defects at once
Get near real-time defect metrics from Bugzilla into the Zephyr Metrics application (and hence the Project Dashboards)

Zephyr comes with a 2-way integration to an external JIRA defect system. Currently, JIRA version 3.10 and above are supported. In order to use this option, a Zephyr plugin needs to be installed on your JIRA installation. While all administration of that defect tracking system continues to remain on that system, Zephyr reads and writes defects and pulls up metrics from that JIRA installation. When this option is chosen, a valid JIRA username/password that has access to all the projects being tracked is needed to fetch data for defect metrics. Each user in the Zephyr system will need their JIRA username/password to File and Search for defects in their own Desktops.
With this 2-way integration, a user will be able to do the following:
File a new defect in Zephyr and it will show up in JIRA
File a new defect in JIRA and search for it in Zephyr
Search defects by various fields
Update an existing defect (add comments, add attachments, change status, assigned to, priority and component fields)
Update multiple defects at once
Get near real-time defect metrics from JIRA into the Zephyr Metrics application (and hence the Project Dashboards)
IMPORTANT:
Please note that you cannot switch to another Defect Tracking System at a later stage. You will be able to turn it off (i.e. by picking the "None" option).