If you're developing a Facebook app - either a game or simply an app to allow users to log in with their Facebook accounts on your website or mobile app, you're asked to have a Terms of Service agreement for the "Terms of Service URL" field.
This requirement from Facebook is optional when you want to make your app live, i.e. no longer in development mode.
A Terms of Service agreement is required because users who will log into your website or app through their Facebook accounts are required to comply with the rules you've set in your Terms of Service when they click the "OK" button.
Here's how to the "Terms of Service URL" field looks. This is where you need to add the URL:
Here's how to find the "Terms of Service URL" field:
Click on "App Details", go to the "Contact Info tab" to add the URL:
You need to host the Terms of Service agreement on your own website. Facebook will not provide hosting.
If you only developed a Facebook app to be used as a social login for your users, i.e. Sign-in with Facebook functionality, link the Terms of Service from your website to the Facebook app in the "Terms of Service URL" field.
This is exactly what Buffer did.
The same link from the "Login Dialog" is present on Buffer's website footer:
Deer Hunter, a Facebook game from Glu, links their Terms of Service for the game with their Terms of Service agreement found on their website. This is how the link appears in Facebook App Store:
The same link to their Terms of Service is available on their website at the footer section:
Please note that a "Terms of Service" is the same as a "Terms and Conditions". The names for this kind of agreement can be any of the following:
Terms and Conditions
Terms of Service