You have created a Web Dynpro DC.
You have defined the WD model.
A WD component is available for which you can define the model reference.
Since you can create more than one WD model for a Web Dynpro DC at design time, you have to define a model usage for the reference. This reference selects the corresponding service API at runtime to be the valid one for running the application.
In the Web Dynpro Explorer view, the model reference is displayed as a logical application unit of the Used Models sub node.