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Install macOS on "Macintosh HD" or on "Update"

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First time I see these two options – which should I use?

This is a 2017 MacbookPro 13" with Intel i5, model A1708, right after I erased "Macintosh HD" using Disk Utility and reset its NVRAM.

How come there are two options and what is this Update option?!

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