Is the list of values within "Enforce list of valid categories form control" needed when left unchec

I am wanting to redo my item category assignments in a way that make more sense with the business model but I am very confused regarding the two form items I've marked up in red.   What do these do?  I read the help but I'm not sure what it means when the checkbox is left unchecked but categories are listed.  Do they even need to be there?  I can't delete these records because it says they are assigned to an item.

But, I can go into "category codes" and enabled a new 3-sement combo and assign it to an item without creating the same combo in the form above.   So therefore I feel like I don't need the list of values in category sets form.  Am I missing a key concept?