A default value is a field value that will be displayed by default for this particular Custom Field.
This can act as a shortcut for you: for example, if you have a sustainability memo that you would like to include for all your POs, then you can paste that text in the field and it will be displayed automatically on every PO.
This value can always be edited or changed.
If a default value is first set, then later updated, existing field values will remain the same. Only newly created entities or POs going forward will contain the new updated field value.