CODE field (deprecated method)
The CODE field in TYPO3 is a deprecated way to select the code which will be executed by a plugin. Think of it like a predefined setting which chooses the according part to render.
This way is not recommended anymore! A more up-to-date way to configure plugins with extending the tt_content table is described in detail in the episode 3 of the Extension Manager & Kickstarter tutorial.
The approach with adding a field to tt_content has one drawback, though. As Mathias Schreiber once put it:
just a small hint: 150 extensions... 150 new fields in the tt_content table.
Better - FlexForms
But the FlexForms-technique come to rescue here. This technique enables you to add a lot of configuration options to your plugin, and all get stored in a single field in the tt_content table. An example can be found in the current tt_news extension, look at flexform_ds.xml and ext_tables.php