As explained in the Container Overview article, typically a website can have two containers viz: Primary Container and Secondary Container.
Primary Container is where the main content appears, whereas Secondary Container consists of the sidebar and various different widgets in the sidebar.
“Full Width / Contained” layout combines the primary and secondary containers and displays in a single container in a clean format. That means a content and a sidebar will display side by side in a single container. This container will display in a container width, leaving a space around the container.
You can find the setting under Appearance > Customize > Layout > Container
Full Width / Contained layout is great for websites that need a clean design without any boxes. We set this layout as default in our integrations with some plugins such as WooCommerce, LifterLMS, etc.
Full Width / Contained is also the recommended layout for page builders like Visual Composer; where page builder requires themes to control the width of the container.