The Application Placeholder (the app icon shown here) is a magic icon that will let you place any app icon, regardless of its name, so long as there’s only one app in the folder. This lets you use the same layout for different apps.
However, if you have multiple apps or other files, you can use the Add Icon… button to specify as many as you want by their exact names.
You only have to do it once when setting up the layout. Then the same layout can be reused whenever you create the image. You also only have to add the icons whose positions you want to set. And you can add via drag-and-drop if you don’t want to use the button and Open panel.
Are you trying to set a specific icon or have DropDMG automatically create a badged disk image icon? There are instructions here.