In the case of a sketch, once a critical point is selected, a reference point is projected onto the sketch plane similar to the Project a Reference Point command. This procedure is a quick way of including external reference points in your sketch and dimension scheme. The external reference point created is of course parametrically driven. If the external geometry is modified and the critical point is moved, the reference point and sketch geometry and/or dimensions will adapt accordingly.

In general, if a command supports "extended" entity picks, you get them by holding down the F7 key. An example is during the Blank Entities command. Normally you can only select entities from the active part or component to blank. With the F7 key pressed you can select from anywhere in the assembly.