What does `System Preferences.app` sync to iCloud? If we go into System Preferences → Internet Accounts → iCloud → iCloud Drive (Options…), we’ll see System Preferences.app is syncing with iCloud.



What exactly is it syncing? I’ve just performed a fresh install on my machine (El Capitan to Sierra) and none of my settings carried over. So what is this doing?
It is syncing your system preferences. The reason you did not see anything happen is that your former system was running El Capitan. The new sync feature only works with Sierra.

So if you had a Sierra Mac and then bought a new Sierra Mac and signed in on iCloud, you could sync over your system preferences from the old Mac.