Panel Specified is for when you want to set the paper size in the printer (Let's say Letter) and then in the driver you send over a Letter size job and all is well. If you send a legal job, the print will fault and tell you to load Letter.
If you use Driver specified the printer will assume whatever you told the driver is indeed loaded, this is preferable for a desktop printer and you know whats in it, it very much isn't when it is networked, 3 rooms over and Sandra in Accounting has a habit of leaving her envelopes in there. Now your spreadsheet burned through 40 envelopes and you have to print it again later.
Does paper type play a role in the "Panel specified"/"Driver specified" options? That's what's tripping me up. I can load heavyweight and specify it in the panel but if the driver is set to plain paper the printer will want confirmation that plain paper is loaded without a way to opt for the panel configured heavyweight instead.
BTW, I'm using the PCL5 driver.
The printer has to compensate for heavier stocks, the fuser temp goes up, probably not doable from the print driver
So, if tray config is set to "Panel specified", be prepared to have to cancel the print job if panel settings are correct but driver settings don't match.
I dream of the day when a driver provides notification of a paper mismatch with a selection option that allows user to confirm which one or cancel job.