This will first attempt to load the payload from SD, if that isn't successful it will then automatically download the payload for your system with HTTP. SD payload loading can be skipped if you hold down the X button. If you hold down the Y button, this will write the downloaded payload from HTTP to SD, if it actually downloaded it via HTTP.
The exact filepath used for the SD payload depends on your system. Since this app can handle writing the payload here itself, writing the payload here manually isn't really needed. Example SD filepath with New3DS 10.1.0-27U: "/hblauncherloader_otherapp_payload_NEW-10-1-0-27-USA.bin". The Old3DS filepath for the same system-version and region as that example is the same, except that "OLD" is used instead of "NEW".