The screw under cutter is used to remove material from the under side of the screw head. Each of the cutters is a different diameter. You place the screw in the one that matches the screw thread and turn it with the screwdriver. The cutting surface removes a small amount of metal from the underside of the screw head.
So, why would you want to do this. One reason is to remove weight from a balance wheel when poising it. Another reason would be to align the screws in a watch in all the same direction (this is a hall mark of extremely high end watch movements.) I’m not sure why else you would want to, honestly, but I’m sure there are other reasons.