Filter By is an option wherein you can filter your search results while viewing a list or a report.
The 'Filter By' option is present on the left sidebar of all the lists and reports.
By default, there are two classification options present in the system.
When viewing a list or a report of documents like Issues, Leads, Opportunities, you can filter the search result to only see the documents assigned to a certain individual. The Assigned to drop-down will also show you the number of documents assigned to each individual.
Just like Assigned To, you will also be able to classify the document based on the entity that has created them. E.g., if you want to check all the Issues raised by a particular entity, you can do so here.
Apart from the two default Filter By options, as per your requirement, you can also add other Filter By fields for any document list or report.