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Projection Transformation dialog
This dialog is accessible from the Edit|Coordinate Transformation menu in Location, and the Edit|Modify Selected Feature|Coordinate Transformation menu in Terrain. For more information, see Coordinate Transformations.
From Projection
Set this to the current coordinate system of the data.
Projection
Allows you to specify that the coordinate system of the data is either undefined, in latitude/longitude, or in some map projection.
Datum
Allows you to specify which datum to use.
Zone
Allows you to specify which zone to use.  This field is available depending on the projection set.
To Projection (Current)
Set this to the coordinate system you want the data to be in.
Projection
Displays the currently set projection.  When working in a local coordinate system, this should be set to undefined. 
Datum
Displays the currently set datum.
Zone
Displays the currently set zone.  This field is available depending on the projection.