In general, people use the term to denote the main focus of the story of the book. The "romance' genre for example, lets you know that the primary narrative focus, is going to be on the relationship drama between the main characters. All other aspects of the story, while important, are simply there to serve the primary focus, getten the protagonists nekked and boinking. It's mostly just there to let people browsing know the kind of story they are most likely going to get, in case it's a genre they don't like. Like myself, I'm not a fan of horror, so if the book says it's a horror novel, which can usually be easily confirmed by reading the synopsis, I'll pass. But something like LitRPG, tells me that it's going to be a book about people playing a virtual reality game, but we see it from their perspective. And the story will be similar to Ready Player One, in the broadest strokes. Namely that the plot will probably straddle dramatic events in-game and in reality as well. Common plot elements will be things like isolation and connectivity of humanity through technology, the sentient level of artificial intelligences, overcoming personal, real world problems by confronting them in game, etc.
So it's more than just a marketing label, it helps the customer know the type of book they will be getting.
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