A clock source connected to the XTAL clock input is used to drive the internal chip clock. The source can be a crystal, a resonator or an external clock signal. The XTAL switch sitting on STK503 selects what is connected to the XTAL pins.
STK500 can generate a software controlled signal with a maximum frequency of 3.69MHz
A crystal can be placed in the crystal socket
You select between these two sources with the OSCSEL jumper. This signal is available on STK503.
The STK503 also has a socket for a crystal. This socket should be used instead of the one on STK500, at least for high-frequency crystals (>8MHz).
The STK500 supplied clock (set the switch to the position indicated by the text STK500)
The crystal socket on STK503 (set the switch to the position nearest the crystal socket)