When running the Applications in Classic Mode, IIS reads the value from this Tag
When running the Applications in Integrated Pipeline Mode (available in IIS7+). IIS reads the value from this Tag
Most of the Time from the VS Development Web Server, you will be using the System.Web. But when its been deployed to the staging or production server which is running IIS 7+, it expects the configurations in System.WebServer
Note : There is nothing going to conflict having both the tags in the same config. Depending upon the environment it will be picked by the webserver. Mostly when using HttpModules and Handlers.