You might choose to use preferred layouts for dynamic display ads if your client:
- wants to choose the features but not the layouts
- doesn’t care if AdWords chooses the layouts and features
- wants to choose the layouts but not the features
- wants to choose the layouts and features
Explanation: With preferred layouts, you’ll choose the layouts and features that you want. AdWords will only use layouts from this pool of preferred layouts (not available for retails feeds). Features of layouts include multiple product carousels, cropping your images to fit the ads, star ratings, and more. AdWords can predict the layouts that are likely to perform best for the people, placements, and platforms where they’ll show, making your dynamic ads even more effective.
Read more here: https://support.google.com/adwords/answer/3265299?hl=en