The Recent Tools list of the Sequence Editor's left-hand side Tools Panel is a list of the effect tools that you have used most recently (with some exceptions, noted below). Clicking on a tool listed in the Saved Tools list makes that tool active.
The Recent Tools list, with several color fades interspersed with several other tools
Not all tools that you use will be added to the Recent Tools list; a tool is only added to the list if you cannot get back to that tool in a single click via the Tools toolbar. For example, if you use the Toggle tool or the Twinkle tool, they will not be added to the list, because you could get back to them in a single click, by clicking the Toggle button or the Twinkle button, respectively. But if you use the Fade Up tool or a custom tool such as a twinkling intensity, it will be added, because it would take more than one mouse click to get back to it - a click to change to the "base" form of the tool itself, and one or more additional clicks to select the proper intensity values.
If you find a tool that you want to keep for future use, you can add it to the Saved Tools list by right-clicking on its entry in the Recent Tools list, and selecting "Save Tool" from the popup menu that will open.