Posts Page (Static Front Page) – clarification

Hello! I currently have my site set to display a static page. I see that you can either select the Front page to display "Your latest posts" OR a "static page". If I choose a static page,... when I go to the "Posts Page" drop-down, it looks as though only my website pages appear (I don't see my posts there.) Can you select an actual post? Or how do you create a "posts page?" (or can you only select your latest posts?) I'm a little confused about that functionality, or why "posts page" is even an option if you choose a 'static page' above. - I understand that if you want to display your latest posts; you select that above, in the "Front Page Displays" category. I don't mind manually designating what I want the front page to show (either post, or page)—but I was curious as to what the point of the "Posts Page" drop-down was if when you select the "A static page" option--- the "posts page" appears to be the same options as the "Front page" drop-down. Any info or clarification would be great. Thanks!