The initial issue state is the first state assigned to a bug, enhancement, or documentation issue when it is submitted by a user. The default values are the group defaults, which are the values assigned to the group to which the user belongs.
You might want to change the default initial issue states for a user account, if, for example, a user has a higher level of technical competence. For example, suppose that within a group of non-technical managers, one manager is decidedly technical. You might want to have this user's issues enter Issue Manager further along in the workflow.