The three selector pins determine which of the multiple inputs of the chip, connects to the output of the chip which feeds into your arduino a/d input.
You control the three selector pins to either high ( 1 ) or low ( 0 ) with three digital outputs of your arduino. These three pins form a 3 bit binary number which has the values 000 001 010 011 100 101 110 111 which are the binary numbers for 0 to 7 which selects which of the 8 analog inputs on the chip you currently want to measure.