Segmentation separates people in the foreground from the background. It only works with people from the chest upwards in the immediate foreground.
Once you've used segmentation to separate a person from the background, you can replace or modify the background. For example, you could use segmentation and texture extraction to replace the background of your scene with a custom texture.
To use segmentation:
You should now see segmentation listed in the Scene tab. You can't see it in the viewport, but segmentation has created an outline around the person in the scene.
When segmentation is selected in the Scene tab you'll be able to see its properties in the Inspector panel.
Turn the segmented area into a reusable texture.
Segmentation creates an outline around the person identified in the scene. Use Edge Softness to blur or soften this outline.
Adjust the outline of the person in the scene.
When you insert segmentation, the capability is added automatically. Without it you wouldn't be able to separate people from the background.