From this section you can set the home page. Make sure to enable the selector on "A static page". This will enable the dropdown menu.
From the dropdown, choose the home page you want to use.
If you set your Blog archive as posts page, it will no longer recognize the custom settings as: chosen page template, featured image and title.
Why you shouldn't set it:
while setting a custom page that you carefully created as Blog as "Posts Page" in the reading settings, WordPress will treat this page as a default archive.
A default archive ignores the specific page attributes and uses instead default options. This will prevent custom settings as title, featured image and other specific page settings to work correctly.
This is why you should leave this setting disabled.
You can set your homepage also from Settings > Reading.