In general, Population counts the slackers/workers that have arrived at your farm and decided that you've built a chill place to live and kick back! As a result, it plays a crucial role in the game!
When you complete all of the tasks for a worker at your bus stop, they are automatically added to your Population - this increases the number on the town sign you see at the side of the road, and most importantly, it adds to the small green Slacker meter that represents how packed your town is!
As that meter fills up, and hits the end, you will earn a NEW Slacker spot on your farm. Slackers are workers that you can place directly on your farm, which spend their time smokin' up and earn you FREE items when you tap on them.
You start with 1 available Slacker spot, and as you increase your Population (by completing tasks of workers showing up at the bus stop), you can earn new spots -- all the way up to 13! (For more about Slackers specifically, click here!)
In the meantime, once you exit out of this screen, you will then be prompted to assign the worker to a contraption such as the dairy, mill, or bakery, or boot them out of your town completely! The choice is yours, and depends on whether or not you want to use them in a contraption at the time.
Keep on boosting your population!