What is the purpose of the "token" custom display setting? On the manage display page of a given content type, you can choose between various display settings. The most commons are "teaser" and "default" or "full content".

However, there's also a "token" display mode (disabled by default). I assume it's added by the token contrib module, but I have no idea what its purpose is and how we're supposed to take advantage of it?

Also: is it typically used somewhere that I'm not aware of? Can it be safely deleted if it's not activated?
As Neograph734 commented, it allows you to change the output of field tokens without actually changing the default display of the field. You can find more information here: https://www.drupal.org/node/1299662

Actually, a similar question already has been answered: Effective use of tokens view mode?