This is another basic technique used in mentalism. It creates an illusion that you have somehow predicted (and maybe even influenced) the spectator's choice. Let's look at a simple example:
You put three pieces of paper on a table, each with a number from 1 to 3 written on it. You hand your spectator a folded piece of paper and ask him to put it on any of the three pieces of paper already on the table. He puts it on 3. You then ask him to unfold the paper. The writing on it says: "You will select 3."
However, if he selects 2, you ask him to turn over the paper he has selected. On the back side of it, you have written: "You will select this paper." The other two papers have nothing written on the back side.
If the spectator selects 1, you ignore the papers. Instead, you ask him to reach under his seat. There he finds your prediction: "You will select 1".
The trick here is that there is no way you could be wrong. Whatever the selection is, you have a way of revealing your prediction.