Certain CodeSnippets (not all) will handle selected text in a certain way when a CodeSnippet is activated. For instance, if you highlight a block of text and then activate the "for" snippet, the selected text will become the body of the for statement.
Any CodeSnippet that can handle selected text should be of the SurroundsWith type. This flag is primarily used to determine which Code Snippets are listed when you emulate the "Insert Snippet" or "Surround With" commands from Visual Studio 2005.