Actually Indexing, when referring to portfolio design, simply means that the portfolio is mirroring something else. It does not have to be broad based at all since the Dow Jones Industrial Average contains only 30 companies and there are index finds that track that. When you are using an index fund you are also forsaking independent research.

Simple answer: When investing, one of the common questions is how well one is doing compared to the market. By indexing (buying a security that attempts to mirror the market), you are in de facto buying the market rather than what in most cases turns out to be a futile attempt to beat the market. Not all indexed securities accurately track the underlying index, so a bit of research will be helpful.

Indexing is a passive investment approach emphasizing broad diversification and low portfolio trading activity. So I understand the output of the calculator to mean that you should come up with a diverse portfolio that tracks well against other index funds.

Index funds – are mutual funds that invests in a portfolio of securities that represents a particular market (like the entire stock market), or, a particular piece of a market (say, like, international stocks or small companies). These funds are built to replicate the performance of their relevant market - and so they should track that market’s indexes. For example an S&P 500 index fund aims to provide the exact same return as the S&P 500 index. We’re big fans of these low-cost, low-maintenance funds.

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Are you sure? I ask because the "indexed at" percentage corresponds to the "Annual increase on new savings" field in the form, which doesn't seem to have anything to do with indexed funds.