The email settings in ACP -> System -> Email Settings would be how you want the software to send out email which originates from the software (email validations, registration confirmations, password resets, notifications, etc...). You would need to designate one of these option or the software would be unable to send out these emails.
This is different than what you are referring to here which would be email services that your hosting provider is offering which would create email addresses on your domain and allow you to send your own emails. (e.g. example@yourdomain.com)
To setup email in our software, you would need to choose PHP, SMTP, or SendGrid API. The first two PHP and SMTP may be available from your hosting provider and allow you to send out email over the same domain with no or little setup. However, you can also use more advance email services that allow for SMTP connections. Then also use SendGrid through the innate API we offer.