What is the use of Lookup Dialogs layout in Search layouts?

What is the use of Lookup Dialogs layout in Search layouts?

  1. It shows the recently viewed records.
  2. We have to enter at least 3 characters to search the existing records.

Salesforce Lightning Experience:

Salesforce Classic:

Lookup Dialogs is the pop up which appears when you click the magnifying glass on Lookup fields.

Sample lookup dialog:

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