Settings.settings generates Settings.Designer.cs which presumably generates app.config which then is copied to output directory as
If you don't have the config file, it uses the default values from the designer. However, the config file allows users/administrators to easily change settings - such as the server you talk to, themes, etc. If you don't have the file, where would you expect those settings to be stored?
You can have per-user settings as well as per-application settings, which are stored in different locations.