What's the Project Settings Hosting Type for?

In the project settings there’s an option to select a hosting type:

When this setting is changed on an existing project all setup targets are removed and you have to re-create them, except one default.

Regardless of this setting local and remote Docker targets can be created, even when the Custom Hosting Hosting type is selected.
Vice versa targets with other hosting types are possible when 'Docker Hosting` is selected.

It seems to me this setting is just meant to setup the first, default target automatically, but I am not sure. @Teodor might have the complete answer to this question I suppose?