The 'Default Contacts Category' allow you to select a category among all the categories created under all the Groups.
Click the 'Default Contacts Category' drop-down box to view all the categories created. Select the Category you wish to display as default when you select a particular group. When you go to the 'My Contacts' or the 'Shared Contacts' page under the 'Personal' or the 'Groups' section the category you selected will be the default contacts category.