This setting helps you set a folder as default whenever you open media library in pages/posts
You can choose to set any folder in your list
A gif image showing the setting to set a folder in your list as default startup folder
Or choose the option of previous folder selected. For example, the last folder you selected is a folder called "Products", then when you go to pages/posts, open media library, folder "Products" is auto opened for you.
A gif image showing the setting to make previous folder selected as default startup folder