It lets a kitchen replace Sprwt's standard zip-code/state tax with an address-based tax API for that state. The options are Default - Use Sprwt Zipcode System and TTR - (Colorado API).

The dropdown is only visible when Client Config > Business: Cart > Enable Custom Tax Calculation Systems is set to Yes for the kitchen, and the choice is saved per kitchen and per state (the tooltip explains: API-resolved rates layer on top and fall back to the zip-code rate when an address has not been resolved yet).