I see two different places where I can set the meter security type. What's the difference?

There is really only one place to "set" the meter security type and that's in the Meter Setup screen. Choices are "System Monitoring", "Pin Code" and "Parts Room Authorization".

The other place you refer to is in the "System Defaults" tab in the "Matrix System" screen (when in "Setup & Reports" area of Matrix). Settings that you choose in this area dictate the initial settings you will see when you add a new meter to the system. Most sites will have similar settings across all meters and it saves you time by pre-populating those settings. Any individual settings made in the "Meter Setup" screen will override these "Global" settings. This applies to most other settings found in the "System Default Settings" also.