Sales period is number of days of sales history that we use to analyse and base our forecasting results on. This only affects the forecasting data in the main Products table - you will still see forecasting results for all periods when you open the detail view for each product.
By default it is set to 90 days which should be a good base for most stores but for some it would make sense to set it to smaller period for more dynamic / fast growing stores.
For now, we don't have ability to accurately forecast seasonal products by using the previous year sales data. This is something we have on roadmap.