This is the default setting for the application identity. When the launching user is chosen for the application's identity, each client account gets a new instance of the server, and each server gets its own WinStation. Because of the separate server instances, launching user is the most secure identity setting. However, there are finite limits on resource consumption. Also, any GUI the server displays will not be seen by the client.
If the application has the identity of the launching user, it runs with an impersonation token. For more information, see Impersonation Levels and Cloaking.