What is the difference between 'Recommended Applications' and 'All Applications'?
With "Recommended Applications", you can only select applications which have declared to be able to open that type of file.

With "All Applications", you can select any application, e.g. open an image in TextEdit (which then will show a lot of strange characters) or a video file in the built-in Chess app (no idea what will happen). This could be necessary if the file format's extension is wrong, or the app is somehow able to open more file types than it declares.