Splash Damage Illustration

Although only the blue player in the center takes a direct hit, everyone within the circle takes damage. The damage may decrease further from the point of impact.

Splash damage, also known as radius damage, is a term used to refer to damage taken by players or objects in the area surrounding a point of weapon impact. Splash damage is most commonly dealt by weapons like the Prototype X SE, the Dragon Gun and the Tanker SE.

Splash damage weapons are effective against a group of enemies: dealing splash damage is easier than damaging all of them directly. They are also useful against moving targets at medium range—experienced players often fire at the ground near the opponent's feet, ensuring that the target is hurt even if the munition does not score a direct hit. Damage usually decreases based on distance from the point of impact, and splash damage attacks generally do less direct damage than direct attacks.

To add a weapon to this category have you got to go to the weapon and place that in his categories. Please do that by the following order: Weapon | (Class) Weapons | (weapon's slot) weapons | Point/Splash damage.