You use the virtual webcam to connect OBS to some local app like Skype or Discord or your browser (for web-based apps like Zoom). Then this app will do further processing and sending/broadcasting the video data into the net.
You use streaming to directly connect to some streaming service with the rtmp protocol.
If there is some system that gives you the choice between the two, the app that accepts your webcam is just a converter from your webcam to the streaming service behind it. With OBS, you rather go the direct way and stream directly. There are people who have just a (real) webcam, for these people the optional webcam input is made.
Using the virtual webcam of OBS instead of streaming directly means quality loss usually, because there are two more up- and downscaling operations in place, that may make the webcam video blurry. The first additional rescaling may take place when the app is reading the webcam, and the second additional rescaling may take place within the video processing of that app. If you stream directly, no such rescaling will take place, and video data isn't passed through some other app and possibly mangled.
