The preferred delivery methods (or preferred contact methods) are member-specific settings added in the 2012.7 release. Its intended purpose is to show which method of delivery that a member prefers to receive "on-demand" communications.
There are two independent settings, one pertaining to offer related Emails and the other pertaining to non-offer related Emails, such as "password help" and "welcome Emails". The valid options are "Email" and "Text", with the availability of the "Text" option being dependent on having a Text Provider setup.
Within "on-demand" messaging, the Email address will be used as a "backup" in the event that the member has "Text" as their preferred option and does not have a mobile number, but has an Email address. However, text messaging will not be used as a backup method in the opposite situation.