It means that as soon as a character from a player spawns, the script will be put inside it. If you want the script to fire everytime a character spawns, put it inside StarterCharacterScripts, but if you want to fire it once a player joins the game, put it on StarterPlayerScripts.
I recommend putting it inside StarterCharacterScripts too, because you have assigned the character variable at the beggining of the code, and if your char dies and respawns the variable wont change (which will result in an error when it calls char again), unless you code it so when a character spawns it resets the char variable, which is just extra coding in my opinion.