Text and description quoted verbatim from Microsoft DirectX 7 help file, included here for convenient reference.

The D3DMATERIALCOLORSOURCE enumerated type defines the location at which a color or color component must be accessed for lighting calculations.

typedef enum _D3DMATERIALCOLORSOURCE {
D3DMCS_MATERIAL = 0,
D3DMCS_COLOR1 = 1,
D3DMCS_COLOR2 = 2,
D3DMCS_FORCE_DWORD = 0x7fffffff,
} D3DMATERIALCOLORSOURCE;

D3DMCS_MATERIAL
Use the color from the current material.
D3DMCS_COLOR1
Use the diffuse vertex color.
D3DMCS_COLOR2
Use the specular vertex color.
D3DMCS_FORCE_DWORD
Forces this enumeration to compile to 32 bits in size. This value is not used.
Remarks
The values defined by this enumeration are used with the following render states:

D3DRENDERSTATE_DIFFUSEMATERIALSOURCE
D3DRENDERSTATE_SPECULARMATERIALSOURCE
D3DRENDERSTATE_AMBIENTMATERIALSOURCE
D3DRENDERSTATE_EMISSIVEMATERIALSOURCE