The Points for Playing and Tournament Scoring formulas allow you to do the same thing, except one calculates a value called "Points" and one calculates a value called "Score". The difference is Points for Playing is configurable per-tournament, and is saved with the tournament. Score is the same across all tournaments for which you are calculating stats, and is saved with a filter (which is part of your preferences). Points for Playing makes it possible to award points (or score players, however you want to phrase it) differently per tournament, while Tournament Score allows you to easily make a change that will affect all tournaments.
When you set the Tournament Score formula to "points", you're just setting it to the same value as the player's points. In your case, since you've already set your formula in Points for Playing, this allows you to easily set Score to the same value. You could paste the same formula in the Tournament Score formula input, but it's easier to just enter "points". Plus, if you decide to change the formula, you only have to change Points for Playing. Tournament Score will pick up the change automatically.