The selection of a coordinate reference system is simply a matter of your further use of the data.
In case of WGS84 the coordinates of the pixels are stored in degree, namely latitude and longitude. This coordinate system works all over the world.
In case of UTM, the coordinates of the pixels are stored in meters, defined by the corresponding UTM zone.
For simple visual interpretation of the data, WGS84 is completely sufficient. But if you want to base calculations on the data or interesect it with other geodata (e.g. vectors) you have to take care that the coordinate references of these datasets match. For example, not every GIS can intersect polygons stored in WGS84 with a raster projected in UTM coordinates, simply because the first range between 0-90 degree North/South and West/East while UTM coordinates roughly range between 150000 and 850000 meters and even larger numbers in North-South direction (distance from the equator).
Regarding the “normalizaiton” checkbox: This is kind of a relic from earlier stages of the software. It doesn’t fulfill a greater task anymore because it was replaced by a separate module. It is explained by Luis here: S1 radiometric correction