Avatar Rig
Item mode places an equipped item (Admin Crown, Doggy Slippers, …) — this is what you use to actually position things. Rig Anchor mode instead moves one of the shared reference points itself (Skull, Left Foot, …) that items are pinned to — you'd only ever open this if the base body artwork changed and a point no longer lines up on the character; it's not part of normal item placement.
This item has separate left/right art (e.g. a left boot and a right boot) — each is calibrated independently. Switch here to edit the other one; both still equip/unequip together as one item.
Rig Anchor mode moves the reference POINT itself (e.g. exactly where "Skull" is on this body) by dragging the coloured dot on the character. You'd only touch this if the base body artwork changes and a point like Skull or Left Foot no longer lines up — everyday item placement (a crown, a boot) happens in Item mode instead, using the Anchor Type dropdown there to pick one of these points and X/Y/Scale to offset from it.
The base avatar is one flattened image per direction, so an arm can't be bent independently.
See docs/AVATAR_RIG.md → "Assets still required" for the exact file list.
Which reference point on the body this item is pinned to and follows. The X/Y/Scale below are an offset FROM that point, not an absolute position — so if the base body art ever changes, you fix it once in Rig Anchor mode and every item using that anchor moves with it, instead of re-placing every item by hand.