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I am trying to create a settlement using the settlement rules. Each settlement has a size. The Settlement Statistics table has a column called "modifiers" which gives a bonus/penalty depending on the size of the settlement.

But what do I do with this number? Is it applied to every modifier for the settlement? Do I get to choose which modifiers this is applied to?

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That is explained just a little further up on the SRD:

Modifiers: Settlements possess six modifiers that apply to specific skill checks made in the settlement. A settlement’s starting modifier values are determined by its type. This value is further adjusted by the settlement’s alignment, government, qualities, and disadvantages. Note that introducing settlement modifiers to your game will somewhat increase the complexity of skill checks by adding a variable modifier each time the PCs visit a new town or city—consider the use of these modifiers an optional rule.

The type here being the settlement's size (Thorpe, Hamlet, Village, etc).

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