As far as I am aware, the Battery settings don't apply when the Garmin battery-pack is in place, because the unit's charge switch detects a specific battery. The battery setting are used when 'other' AA batteries are fitted, they are used to drive the battery level indicator, different battery types have different voltages and discharge curves so the unit could report a 'good' battery as bad if the battery setting are wrong
Standard NiMH batteries are not very good at holding a charge over time they have a poor charge 'shelf-life', to get around this a new sort of NiMH battery was designed which keeps it's charge for many months, this new type has a few different names that include, 'Low Self Discharge', 'Ready to use', 'Pre-Charged' and 'Ready Charged', their discharge curve is different to the standard ones, so Garmin has an setting for them