Named users are a part of the concurrent user functionality, which is an additional role function. If concurrency is enabled, a number of "named users" can be assigned which will not count toward the allotted number of concurrent users. If you are not using concurrency, then Named Users should be assigned as 0.
If you do have concurrency enabled and set as ALL, then the number of assigned Concurrent Users will be the maximum number of users allowed to log in at one time. If concurrency is set as NAMED, then the specified number of Named Users will always be permitted to log in, with the users assigned as Concurrent Users being counted separately.
For example, if you have a concurrency mode ALL set for 50 concurrent users, any 50 users from that organization can be logged in, and when the 51st person logs in, they will be denied access until someone logs out. If, however, that 51st person is set as a Named User, and the license concurrency mode is set to NAMED, then that person will be permitted to log in regardless of how many other users are logged in.