A mail merge run here is just like loading saved settings from the mail merge tool and running that merge. Only saved mail merge settings can be used in scheduled tasks.
Checking any of the Send ... summary of merged letters to notification recipients checkboxes will deliver to the notification recipients of the task group a summary of all generated letters here. The only difference between the three is the format of the summarized letters. If this merge generates no letters, no summary will be sent. Checking Compress file into a .zip file... will make a WinZip-compatible compressed file with the summarized letters in it; this can be substantially smaller than the uncompressed file but requires an extra step on the recipient's end before they can view its contents.
Running a merge as a scheduled task, just like running one from the mail merge tool, does not deliver the merged letters. One of the E-mail Robots, the Scheduled E-mail delivery task and/or the Scheduled SMS/text message delivery task must be used for that.