The trigger for whether the Format ▸ Make Formatting Default command is active is simply whether or not the cursor is in an area that contains formatted text (so, main editor, document notes, bookmarks preview area, etc.). The command contains two choices, both set background settings without having to go into settings yourself and setting them up.
You can read more about this topic in the user manual. Easiest thing to do when confronting a new feature is to look up the menu command in the appendix. Oftentimes, if the menu command is related to a larger topic, you will find cross-references. So if you really want to know where the settings are that this command impacts, you can look them up from there.