Always Valid Lightbox is a Lightbox plugin whose markup adapts to the WP site's Doctype, in order to always provide valid HTML markup.
Here's an explanation for each option :
"Automatically include the jQuery library in your HTML document" : Always Valid Lightbox needs the jQuery library to work. If the jQuery script is already embedded in the section of your documents, or if one of the plugins you're using automatically includes the jQuery library, you should check the "No" button. However, if there is no active instance of jQuery running on the front-end part of your website, you should check "Yes" in order for the plugin to work.
"Automatically detect the image links in your posts and apply the lightbox attribute to them" : "Yes" allows the plugin to work in automatic mode. This means the plugin will automatically detect your images and trigger the lightbox effect when you click on them. If you choose "No", you will have to manually edit your site contents and mark all the links which should trigger a lightbox effect with the 'data-lightbox="true"' or the 'rel="lightbox"' attributes.
"If you chose yes, select which attribute should be inserted in your code (choose accordingly with your doctype declaration)" : only available if you chose 'Yes' to the previous option. It allows you to choose the kind of markup the plugin will automatically insert in your page to trigger the lightbox effect. No matter what choice you make, the lightbox will work. However, the W3C validity of your page will depend on it, so you should choose your markup in accordance with the DOCTYPE declaration found in your site header.
"Lightbox skin" : choose the appearance of your lightbox effect
For more information about HTML validation and Doctypes, please consult the following page : http://validator.w3.org/docs/help.html#validation_basics
The lightbox effect automatically takes the HTML "title" attribute on your images in order to display image titles. So when uploading your images in your WordPress posts, do not forget to fill the "Title" field.