An app is a set of event handlers. When an event occurs, perform some instructions (blocks). However, within those event-handlers, the app can ask if questions and perform different instructions based on the answers. Such conditional blocks form the basis for the intelligence of an app.
President Obama appears when the apps begins, but each time you click the picture it switches back and forth between Obama and Mitt Romney
A reference block (the light blue 'Button1.Image') is used to see what the existing image is, while a set block (the darker blue 'set Button1.Image' block) is used to change the image the appears. In general, if tests will use reference blocks to check the current state of the app.
As a second if-example, let's change the app so that it randomly chooses one of the two pictures (each time the user clicks, it might show Obama, might show Romney). Such random behavior is the part of many games.