What this feature offers is for you to allocate Shares, Funds etc into groups which you can then allocate a percentage to each desired holding. Then each time you have a deposit of funds into our account either from dividends or deposits you would then split that as much as possible between your desired allocations in the group.
Additionally, M1 finance lets you have multiples of these custom groups added to your portfolio can also have percentages added to them. Allowing you to build a diversified portfolio without having to rely heavily on funds for diversification.
see for more details on M1 pies