Application Context filters apply security policies to applications in a user context.
Interactive Users Filters
Application Context filters are mostly applied to interactive users as a conditional filter for an application control policy.
It's recommended to use this filter when you use a broad scoping application control policy (such as any file with a system file owner for a Whitelist) that way you don't catch applications launched by system services/accounts, etc.
LocalSystem and Service Application Filters
This filter is rarely used in environments. You would use this to target or limit application control policies to applications only launched by the Local System or Services.
Service Application Filters
Same as the LocalSystem and Service Application filters, except it targets only Services that get executed.