Determines where this credential can be used.

System

This credential is only available to the object on which the credential is associated. Typically you would use system-scoped credentials for things like email auth, agent connection, etc, i.e. where the Jenkins instance itself is using the credential. Unlike the global scope, this significantly restricts where the credential can be used, thereby providing a higher degree of confidentiality to the credential.

Global

This credential is available to the object on which the credential is associated and all objects that are children of that object. Typically you would use global-scoped credentials for things that are needed by jobs.

In general, a credential is defined in one place (e.g., the credentials configuration page under "Manage Jenkins") and then used in another place (e.g., when connecting to a new SSH build agent). The scope allows you to say "this credential is only used by these places" by looking at the relationship between the two locations.