What is the purpose of creating custom activities on my watch, when they sync to Garmin Connect as one of the standard activities? A new activity that does not register anywhere seems rather pointless.
One use for custom activities is that you can customize the settings for each profile. For example during a race you probably want to see different data on the watch screens than during training. I use different alerts for short runs vs long runs. For me it is just annoying to have eat and drink alerts during a 5-10 km run, but for runs longer than 20 km it is vital to start to drink and eat right away to not run out of energy after a few hours.
For activities that you don't want to categorize as one of the standard profiles (run, bike etc.) you should use the Other type as base profile.