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Property modifiers in etabs are used to model cracked behaviour of concrete sections. They are only applied to concrete members because of cracking. Gross moment of inertia is bd^3/12 for a rectangular section, but when you make this member of concrete, it will experience cracking when loaded after some time. This cracking will happen when concrete reaches its tensile capacity which is about 7-10% of its compressive strength. Formula to calculate cracking moments are given in ACI. For example 3000psi will have only 300psi of tensile strength. Actually the reinforcement starts its work when concrete cracks because of tension. After cracking concrete is no longer able to carry tension so steel starts taking the tension. So now if concrete cracks after 300psi the moment of inertia will be reduced because of cracking. If moment of inertia is reduced, its stiffness is reduced, taking less moment, and its deflection increases because of less stiffness. This moment which the cracked beam is not taking anymore will be re distributed to other structural members based on their stiffness. If you read ACI chapter 10, there are many sets of modifiers used for different types of analysis. ok im leaving from office, if you have more doubts i will write in later.

The use of these property modifiers coefficients should be for serviceability. Update: Members should be checked for strength checks also using cracked section properties.