Referencing one list from another...

Found this example here on Excel Forum, and it does pretty much what I need it to do.
I would like to revise the values to fit my needs.

I have several options in one list, call it MASTER.
When I pick Item A from the MASTER, I want to show all available options for that Item A in another list, called OPTIONS.
I have 10 Items, and they all have a variation of 6 different options, some Items have 1 option, some have all 6.

Anyway, the worksheet I found is attached, but cannot figure out how this is working.

What am I missing here?