This option can be found in
-> It opens a pop-up window:Contents of the pop-up Padding Color window.
You have there several possibilities to select canvas padding color. Canvas is the surface the image lays on: it looks like a frame around the image in the image window. That's only a matter of personnal reason as this option doesn't interfere with the image itself.
From Theme: That's theme defined in Preferences/Theme
Light/Dark Check Color: Ckeck representing transparency is defined in Preferences/Display.
Select Custom Color: Opens the Color Selector window.
As in Preferences: This button allows you to return to your choice in Image Window/Appearance.