Filter is by object (record type). For example, Account, Contact, Opportunity, etc. 

There must be a field on this object which we can use to determine whether to include or exclude. For example, "created date", "status" or even a custom field. 

A record which is filtered out (excluded) means that any related records will also be excluded by default. For example, if the Account is excluded, then its related Contacts, Opportunities, Notes, Activities, etc. are also excluded. 

Filters are included in all Plus and higher packages. The pricing for the migration is based on the size of your source database, prior to any filters being applied.