Target selectors allow you to be able to run Pixelmon commands onto a player in any sort of automated way through command blocks and functions. If you wish to script custom commands that grant Pokemon, or give money, you've been able to run "/pokegive @p Bulbasaur" or "/moneygive @p 2000" in commands. This ties into Minecraft's own data systems, allowing you to customize your commands to give players rewards using any sort of arguments dealing with location, distance, scoreboard values, tags, inventory, etc.
Without this feature, you are unable to run any modded command that exists in the mod on players without knowing their explicit username, effectively disabling Pixelmon commands from being ran automatically in maps or servers that use commands.
Currently as it's set up in 1.20, you can run /pokegive Jond Bulbasaur and receive the Pokemon, but doing it with @p in place of the username does nothing. It's been possible to run these commands on players through Minecraft for years, and not being able to has been reported on as a bug and fixed before. I'm hoping that's the case again and the feature had not been removed because of how critical it is.