With ANSI setting in SQL Server generally being handled on a connection by connection basis, does anyone know what purpose the ANSI settings in sys.databases serve?
The database settings are used only when the API or session does not specify the settings. Modern drivers like SqlClient, ODBC, OLE DB, etc set these options ON automatically by default, although they can be later toggled as needed. Legacy APIs (e.g. DB-LIB) do not specify the settings at all so the database ON setting is used in that case.