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When you create an entity in CDS, there is an option to enable as an activity task. Note this is different setting than creating the entity as an activity entity that shows in the activity timeline--that is the entity type/Activity entity field. What does the enable as activity task option do? The description of this option is "allow the entity to represent a task that is performed by an activity entity."
Basically let you represent a task that is performed by an activity entity with your custom entity without you having all the activity properties in your custom entity.
If you create a new activity task you will a bunch of fields and properties coming from the activity type of entity, if you just enable as activity task you don't get all of that but you can still represent an activity task with your custom entity.
I got official confirmation about what that setting does—it’s the old enable this entity to have activities linked to it setting, but the description is incorrect. If you check that box then go look at it in the classic solution explorer you will see that it is the same setting as the activities checkbox.
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