Interesting, I never played with that before. So here is what happened when I did just now play with it.
In the "Add Popup text" I entered: Test1
In the "Conversation" I entered : Test2
Here is what happened.
It created a conversation named (You Guessed it) test2. In that conversation there was a single node that to be spoken by the object. Of cource that node simply contained 'Test1'
Now the object I tested on was a cheast that had inventory.( I Am thinking that is important for how it handled the next step.)
The Script nw_startconv was placed in the OnUsed event of the placeable, Causing the placeable to Speak the popup text every time it was used.
So the option really does nothing that you can not already do by just adding a conversation to the object and a script to start the conversation. It is just a short cut for setting it up. Kind of like the 'Set up Store" option.
A