Derived references are when the context of a form causes a choice of another form to be reduced to a single form.
The most common example of this is a time sheet whose detail lines point to a project. Suppose the project has a rate code and that rate code leads to a list of rates that are identified by the employee number and the rate code. It is clear that only the rate that is associated with the employee number on the time sheet it is is worth considering. Formever will detect cases like this and in the Derived References category it will offer up such choices as it would a normal reference.
A derived reference also works for detail line lists. For example, suppose in the case above that the project form had a detail line field, and each detail line had a reference to an employee and a rate (a quantity with a unit of currency/time duration). Normally there is no path to a single detail line as there are many to choose from and no way of deciding. However in this case, the employee number on the top level of the time sheet is in the context of the time sheet detail line, so when using the field chooser to move from the detail line to the project form the list of the employee-rate detail lines on the project form will be offered as a derived reference as only one of those detail lines makes any sense to use. (If, in a probably erroneous situation, there are duplicates, i.e. more that one line that points to the same employee, the first such detail line will be chosen).