What is "Fill active server until full then switch to next least used" option in WHMCS hosting servers section?

The active server is the one denoted by the asterisk () on the server list page (Setup > Products/Services > Products/Services > Servers).

Once the % Usage of the server reaches 100%, the next hosting account will be created on the server with the lowest % Usage figure.

Related documentation: http://docs.whmcs.com/Servers#Server_Groups