In this step of the exe4j wizard, you define the project type that determines whether exe4j compiles JAR files into the executable or not.

In the regular mode, exe4j is a pure launcher and relies on all JAR files and resources to be present in the distribution. In other words, the exe4j executable is an addition to your distribution, and not a replacement for it.

In the JAR in EXE mode, exe4j includes the JAR files specified in the class path configuration of the java invocation step into the executable. In this way, you can distribute your application as a single executable - provided it does not need additional support files and directories. In this mode, you can only select "archive" and "environment variable" in the classpath entry dialog. The JAR files are extracted to a temporary directory at runtime and deleted after use, the incurred overhead is minimal and usually not noticeable.