Ranked by and rank reset dimension are with similar functionality.
Ranked By/Reset dimension in rank will select the dimension on which the ranking is based if you want to rank by a particular dimension rather than by all dimensions in the block.
Ranked by will come in picture when you click on the add rank and can choose the dimension on which you want the rank grouping.
e.g if you have Country,State and sales in the report.If you want to get the sales values rank by country.You can click on the Add Rank in the Analysis tab and can select the Country in the Ranked By.
Other option is create variable Like Rank=rank([Sales];([Country))
Country in the formula is the reset dimension.You will get the rank by country.If you want to select the top 3 then you need to add the filter at block level and restrict the values to 3.