Some auth plugins will authenticate users with different auth methods. For example auth_saml2 will authenticate users with other methods which means you can populate users in Moodle with, say, LDAP but still use SAML2 for SSO which is useful as you can't populate users with SAML2.
As far as I can see the only difference between "Manual accounts" and "OAuth 2" when using OAuth 2 authentication is that if the user is set as "OAuth 2" then changes to the user on the OAuth 2 server (e.g. first name, last name) will be updated in Moodle. If the user is manual then they won't be updated.