How to Set-Up an iPod Nano: Fourth Step

On the top edge of the window you'll find a selection of tabs for your iPod, including the current summary page, music, movies, TV shows, podcasts, iTunes U, photos, contacts and games. In each of these tabs you get to decide what media from your iTunes collection gets transferred to your Nano.

For instance in the music tab, you can decide to sync your entire music library, or just the specific playlists, artists and genres listed below. When you're happy with the selections, hit the apply button in the bottom right corner and iTunes will start moving your music over to the Nano.

From: cnet.com.au

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I think this is optional, this is just another way to manage your file.