DCS is basically the same principle but a technically different solution.
To expand a little bit on KA4POL's comment. DCS or DPL is a three digit octal code that is transmitted continuously, like CTCSS, and performs the same function. Instead of a low frequency audio tone, it transmits a three digit octal number which, when it matches the code set in the radio, unlocks the squelch. So, functionally they are identical though the methodology is different as KA4POL noted. You can tell which is being used by the form of the number; a DCS code might be 023, for example while a CTCSS tone might be 110.9.
As for which option to pick, most hams around here pick the "ENCODE" option which transmits the tone to enable the repeater but the receiver hears all traffic on the frequency. That way you will be able to talk on the repeater but will not miss a call from someone who isn't transmitting the tone/code. Just a little extra information; hope it helps.