So 1.4 and 2.0 indicates different versions of the implementations of the TCP/IP protocol suite.
So essentially different library versions of the 'Lightweight TCP/IP stack'
'Standard' IP packets can have different sizes.
The header in the packet is usually always the same size, so different size packets will have different levels of space for data in each packet.
As TCP also has a handshake per packet, then smaller packets will cause more bandwidth to be used by 'administrative' aspects. And bigger packets will allow more data to be sent, over similar bandwidth.
In a very crowded (WiFi) bandwidth, it may however be an advantage to use smaller packets, so more users/connections can be allowed to use the available (WiFi) bandwidth.
A small MCU, like the ESP8266, may also have limited RAM available, so the RAM buffers needed to handle the larger packets (because of more data space in each packet) may also be a concern. So you may need to consider how much RAM the rest of your sketch needs. - so your ESP8266 sketch will not crash because it runs out of RAM
When there is no 'IPv6' letters in the option description, then the IPv4 protocol is used.
I hope this answers some of your questions about the 'lwIP' options for the Arduino ESP8266