TL; DR version of my answer: In view of your age and the fact that you have just opened a Roth IRA account with Vanguard, choose the Reinvest Dividend and Capital Gains distributions option.
If Vanguard is offering an option of having earnings put into a money
market settlement account, it might be that you have opened your Roth IRA account with Vanguard's brokerage firm. Are you doing things like investing your Roth money into CDs or bonds (including zero-coupon or STRIP bonds) or individual stocks? If so, then the money market settlement account (might be VMMXX, the Vanguard Prime Money Market Fund) within the Roth IRA account is where all the money earned as interest on the CDs or bonds, dividends from the stocks, and the proceeds (including any resulting capital gains) from the sales of any of these will go. You can then decide where to invest that money (all within the Roth IRA). Leaving the money in the settlement account for a long time
is not a good idea even if you are just accumulating the money so as to be able to buy 100 shares of APPL or GOOG at some time in the future. Put it into a CD in your Roth IRA brokerage account while you wait.
If your Roth IRA is invested only in Vanguard's mutual funds and is likely to remain so in the foreseeable future, then you don't really need an
account with their brokerage. You can still use a money market settlement fund to transfer money between various mutual fund investments within the Roth IRA account, but it really is adding an extra layer of money movement where it is not really necessary. You can sell one Vanguard mutual fund and invest the proceeds into another
Vanguard mutual fund or even into several Vanguard funds without needing to have the funds transit through a money market account.
Vanguard calls such a transaction an Exchange on their site.
of course, you can just choose to reinvest all the dividends and
capital gains distributions made by a mutual fund into the fund
itself. Mutual funds allow purchases of fractional shares (down to
three or even four decimal places) instead of insisting on integer
numbers of shares let alone round lots of 100 shares. All this,
of course, within the Roth IRA.