The "Deliver Method" indicates whether or not there is a Service Queue--if there is, it is set to "Duplication", if not, it is left as "Physical." So it indicates which method KLAS will use to automatically serve the patron, and which set of rules it will follow.
For Physical patrons, Reserves will be Assigned automatically as soon as there is inventory available, even if the patron is set to BARD Only or some other On Demand serve type. Also, all Tracked Items will count towards their Cutoff.
For Duplication patrons, cartridges will be created according to their Cutoff, Shipment Size, and Next Serve Date so long as there are titles in their Service Queue; Only BARD and other On Demand serve types just tell KLAS not to refill the Service Queue unless there is a "demand" for service, meaning a new Request or Reserve. Also, only Duplication Cartridges will count towards their Cutoff, not other Tracked Items that may have been sent from the Physical inventory.
It may be possible to add other Delivery Methods in the future--I think 'Over the Air' direct download to the DA2s is the most likely, and since (per my understanding) that will go via the BARD Wishlist, that will likely be a good fit for your self-serve/BARD-Only patrons that never contact you to send the occasional exception.