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MNP DeveloperMNP Developer 

what is a custom settings

Das AnilDas Anil
By Definition Custom Settings ( Set up --> Develop --> Custom Settings ) is similar to Custom Objects let you utilize custom data sets across your org, or distinguish particular users or profiles based on custom criteria.Custom settings data is exposed in the application cache, which enables efficient access without the cost of repeated queries to the database. This data can then be used by formula fields, validation rules, flows, Apex, and the SOAP API.

This can be used to define Static Data that can be used across organization, users or profiles. Data defined in Custom settings being readily available in cache can be used to define Global Parameters or static data that is used in the application.
 
Nikhil KhivansaraNikhil Khivansara
Custom settings are similar to custom objects in that they let you customize org data. Unlike custom objects which have records based on them, custom settings let you utilize custom data sets across your org, or distinguish particular users or profiles based on custom criteria.Custom settings data is exposed in the application cache, which enables efficient access without the cost of repeated queries to the database. This data can then be used by formula fields, validation rules, flows, Apex, and the SOAP API

There are 2 Types of Custom Settings :- 

1. List Custom Settings - Cannot be used in Formula fields/Validation rules. It provides a reusable set of static data that can be accessed across your organization

2. Hierarchy Custom Settings - Can be used in Formulas and Validation rules. Also, uses a built-in hierarchical logic that lets you “personalize” settings for specific profiles or users.

Salesforce has also come up with - Custom Metadata - 

Custom metadata was introduced generally in Summer 15 release. Before Custom metadata type, we were using Custom settings of List type. Problem with custom setting was that, during migration or in packages, data were not migrated. We had to either use data loader or some API to create initial data. However, if we package custom metadata type or migrate it, data will also be migrated along with it.
 
Below are some links for your reference:-
 
https://developer.salesforce.com/blogs/engineering/2015/04/custom-metadata-types-ga.html
 
https://developer.salesforce.com/docs/atlas.en-us.api_meta.meta/api_meta/meta_custommetadatatypes.htm