"Preferred Placement" is hint for layout algorithms for placing edge labels with "Placement" strategies that support arbitrary positions. E.g. algorithms "Layout" -> "Label Placement" and "Layout" -> "Hierachical" with setting "Edge Labeling" from tab "Labeling" set to a value other than "None" try to respect that hint for "Placement" strategies "Free: Anywhere" and "SmartFree: Anywhere".
In short, "Preferred Placement" affects the way layout algorithms place labels.