Receiver based failsafe is where you, from your transmitter and receiver, configure channels to output desired signals if your receiver detects signal loss.
The idea is that you set throttle and other controls so the aircraft descends in a controlled manner. See your receiver's documentation for this method.
It is possible to use both types at the same time which may be desirable. Flight controller failsafe can even help if your receiver signal wires come loose, get damaged or your receiver malfunctions in a way the receiver itself cannot detect.
The failsafe system is not activated until 5 seconds after the flight controller boots up. This is to prevent failsafe from activating in the case of TX/RX gear with long bind procedures before they send out valid data.
Guard time for failsafe activation after signal lost. This is the amount of time the flight controller waits to see if it begins receiving a valid signal again before activating failsafe.
Delay after failsafe activates before motors finally turn off. This is the amount of time 'failsafe_throttle' is active. If you fly at higher altitudes you may need more time to descend safely.