Your quote by the "Merry Men" in The Adventures of Robin Hood (Scene 2)
from the top on down
England is rotting from the top on down! We pledge our revenge on Nottingham Town!
has the same meaning as
from head to toe
from head to tail
from tip to toe
from top to bottom
meaning the entire structure or being.
NB: One also notes that "bottom" does not rhyme very well with "town", and by phrasing this way the rhythm is kept consistent.
I originally thought this might have been a Leicester City football chant, but Nottingham City FC is commonly known as Forest.
I would say that, in your sentence, "where is really matters" is adverbial phrase. It tells where your power to choose is made supreme.
As for the meaning, we often use the phrase where it matters to mean in the times or places that are most important or significant. Macmillan defines the phase like this:
it matters (phrase) used when you are talking about whether something is important, or about whether something makes a difference
Some example usages in Macmillan include:
“I’ve forgotten my swimming stuff.” “It doesn’t matter – you can borrow these.”
Here, the phrase "it doesn't matter" means "it's not important" (because, in this case, the person's friend has some swimming stuff that can be loaned, so the outing won't be ruined after all).
I don’t think it matters that he hasn’t got a degree.
Here, the phrase is used in the negative, and it means that the person looks qualified even though they have not yet earned a college degree.
A charitable community blog was titled:
Make a Difference Where It Matters
That means the foundation can help you give to a community organization that is most important to you.
A synonymous phrase would be where it counts. One news article says:
In today's digital world, singles are so busy matching that they're not actually connecting in person, where it counts.
As a footnote, in addition to saying where it matters, we can also say phrases like why it matters, or when it matters. For example, in February of 2019, Forbes magazine published an article with the headline:
Indra Nooyi Joins Amazon's Board ― Why It Matters For Women
and a sports column reads:
He's at his best when it matters most, in the team's biggest games, especially in the playoffs.
Best Answer
Most would interpret the idiom as EnglishCentral has described it; it's commonly used in the same manner as "(to start) from scratch" or "(to start) from the beginning".
Or, as Wiktionary describes it (emphasis added)...