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A Profile Filter is a piece of data you can add to a user that allows you to associate that user with data for data filtering.
For example, a filter might be the company name of a user, e.g. "Fruits Inc". The benefit to this is that you can add several users all with the same profile filter. So you may add several users that are from the company Plastic Inc. It should be treated like a tag.
For example you may have a bloc where 20 users for 6 different companies log in and submit data, however you do not want each of the companies to have access to data from the other companies, however you do want the users to see all the data within their own company. In this case you would create a Plain Data Field which contains the value of Company Name (perhaps it could be fetched using the Populate Local Field with Data from elsewhere rule. You would then apply the Profile Filtering parameter to this field. The result of this means only people with that profile filter in their user account will be able to see data where the company name is "Fruits Inc"
In this example, we use the Logged In Username to fetch data about that user, this data would be stored in another bloc. The data we fetch would be the Company Name for that user. We click Apply Profile Filter to the Company Name field. This results in everybody with the Fruits Inc data only seeing data where the company name is Fruits Inc. Nobody else can see that data.