That initial selection will default the behavior for how the app is displayed. A phone assumes most screens will be viewed in a Portrait perspective, and table assumes they will viewed in a Landscape perspective. Both can have their sizes customized, to meet your intended use-cases.
As far as responsive apps go, this has to do with a screen size that may dynamically shift. This is mostly applicable to web browser viewing - think docking a window on the side of the screen (basically halving the size). Responsive apps do not apply to the Power Apps mobile app (iOS/Android), because that screen size will not resize. Additionally, most modern phones have a very high screen resolution, so you cannot really even leverage the screen size properties.
Think about your primary use-case for the app, and pick the template appropriately. In most cases, trying to build an app that works perfectly on both web and mobile will be challenging - you will usually have concessions (too big in browser, too small in mobile, etc.). Consider the primary use-case, and then do your best to accommodate the secondary use-cases.
