Why would I enable "Install Unknown Apps?" I have a LG G7 Thin Q running Oreo. While poking around the settings, I came across "Install unknown apps."
Settings -> Apps &amp; Notifications -> Special Access -> Install unknown apps


It is a list of programs that may install unknown apps. Only Messaging and Email are allowed to install unknown apps. 

Why does Android have the option for apps to install unknown apps? It seems rather vulnerable to malware.
Starting Android Oreo, sideloading (installing an app from a source other than Play Store) has actually became more secure.

Previously (Naugat or below), when you used to tick "Unknown Sources" option, it actually universally allowed all apk sources (Chrome, Amazon Appstore etc). Means, the system didn't care about the source of the apk file.

Now, you need to allow individual apps which can be set as source. And, don't worry: That allowed app won't be able to install apps in background. You will still need to hit Install button to install an app. So, no security compromises here. You'll just have peace of mind while hitting Install button. If you've allowed Amazon Appstore only, then you can be sure that you won't be installing a malicious apk which was downloaded in background by an advertiser app.