If you’d like, you can set the target age and grade of your book, making it easier for people looking for books appropriate for specific ages and grades to find it. This is completely optional. You choose a recommended minimum and maximum age for each. Available options for age and grade (both for the minimum and maximum) are as follows:
Again, choosing ranges for both of these are optional. You can set an age range, a grade range, both, or neither.
Amazon states the following:
Choosing an age range will improve the discoverability of books in the Juvenile book categories on Amazon.com and Amazon.co.uk.
Choosing a grade range will improve the discoverability of books in the Juvenile and Education book categories on Amazon.com. The grades are based on U.S. grade levels.
You can and should read more about age and grade ranges on this page from Amazon.