"Option Select describes a situation in a fighting game where the action of the player is ambiguous, and the computer will determine the outcome based on the situation."
The most common example for an option select, is a crouch teching (Street Fighter). To perform a crouch tech, you simply press LP+LK while holding down-back. Since your character isn't standing they won't perform a throw whiff animation, and instead will do a crouching LK. If your opponent attempts to throw you, you will tech the throw.
A more advanced option select would be Yun's crouching LK, stand LP/Ultra setup, in Street Fighter IV. Here you're buffering Ultra (qfc.(2x)+3P) after a crouching LK. If done slow enough, the engine will go into a standing LP on hit or block. However, if the crouching LK whiffs due to the invincibility frames of your opponent's wakeup option (e.g: backdash or Shoryuken), Ultra will come out instead. This allows you to simultaneously buffer Ultra, and continue a combo or block string on hit or block, respectively. The engine will perform either option depending on the situation.
The option select presented here
appears to only have one option. Essentially, you're either still special canceling, or you're whiffing an attack/string. It's still technically an option select, I suppose. Though, the real exploit here is the ability to special cancel normals that pass through your opponent's invincibility frames.