it all has to do with the ATB (active time battle) bar. If you set it to wait, once a character has a turn and you go through commands that you want him/her to preform, the battle will be on hold, no one will attack and the other character's ATB's will stop until that active character is done.
if you set it to active, the battle will never stop. Enemies will attack whenever the get a chance, and characters ATB's will always be moving.
I'm not sure what reccomended does, probably sets it to Wait because that is easier than using Active.
just use whatever you prefer. Wait is usually easier than Active, but Active has its perks.
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