Adjust beats is a visual representation of the tempo scale allowing you to adjust the time on the ruler of the MIDI or audio graphic editor. Click/dragging the ruler markers towards the beginning of the sequence creates a faster tempo change from the point of the click, towards the end of the sequence, a slower tempo.

You can adjust the tempo within beats, measures or fixed duration. This means any movement in the ruler will effect the tempo in increments of beats/measures or a note value. For this example: you have a 1 bar soundbite of a 4/4 drum beat. The tempo of the sequence is a quarter note = 176. The tempo of the soundbite is different that the sequence (slower or faster) and you want to change the tempo of the sequence to fit the soundbite. Here's what you do:

1. Drag the drum beat so that the beginning is at 1|1|000.
2. View the soundbite in the Sequence Editor.
3. Open the Adjust Beats window, check the box for "Drag beats in Graphic Editor," choose to adjust "Measures," and "Apply adjusted beats tempo until end of sequence", with Snapping set to "None."
4. Find beat 2 in the soundbite (estimate where beat 2 is by viewing the waveform) and beat 2 on the Sequence Editor ruler.
5. Click & drag beat 2 of the Sequence Editor towards beat 2 of the soundbite so the red line lines up with beat 2 of the soundbite.

The same can be applied to MIDI events. This is where snapping comes in handy. Here's an example:

1. Play in 4 quarter notes to a sequence regardless of the sequence's tempo.
2. Open the Graphic Editor for that track.
3. Open the Adjust Beats window, check the box for "Drag beats in Graphic Editor," choose to adjust "Beats," and "Apply adjusted beats tempo until end of sequence", with Snapping set to "None."
4. Click ruler on the nearest start of a measure (i.e., 2|1|000). You'll notice the red line indicating measure movement will snap to the first note.