@Tarek Nabeel , Based on my research, I find that if "DEFINED IN" option is selected all overrides that are defined in the specified Management Packs will be selected. For "APPLIED TO" option the report filters data to select only Overrides that override elements in the list of selected Management Packs. Default value is "DEFINED IN". We can see more details in the following link:
https://systemcenter.wiki/?GetElement=Microsoft.SystemCenter.DataWarehouse.Report.Override&Type=Report&ManagementPack=Microsoft.SystemCenter.DataWarehouse.Report.Library&Version=7.1.10226.1177
Note: Non-microsoft link, just for the reference.
Hope it can help.
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