Roles assigned here are applicable site-wide. Thus, it is sensible to assign only roles that require this functionality. The Manager role and Course Creator role are two examples of such roles. Assigning a teacher or student here would grant them the ability to teach or study in all courses on the site, which is usually not preferred.
To assign a role in the system context:
Go to Site Administration> Users > Permissions > 'Assign system roles' > Choose a role > Select a user you wish to assign by clicking the 'Add' button.