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Purpose of "This field is a list"

Can you please explain the exact purpose/use of below yellow highlighted check box saying “This field is a list (multiple entries)”
What will happen if i dont tick this option ?

Use list if there will be more than one entry in that field for that thing. Leave unchecked if the field will only need one unique entry at any given time.

See below, where the first example has Favorite Color as a single value and the second example with Favorite Color a list value

User

  • First Name (John)
  • Last Name (Smith)
  • Favorite Color (Blue)

versus

User

  • First Name (John)
  • Last Name (Smith)
  • Favorite Colors (Blue, Red, Black)
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