SQL licensing is applied to the installed instance. If the image was captured with Developer edition activated, that's the license it will use.
The choices are for the OS being used in the image. As it is based in Windows Server 2016 you should select Server, and then answer if you have an eligible Windows Server license to use with this VM, or leave it unchecked to use the Pay-As-You-Go model.
The question about Azure Hybrid Benefit and existing Windows Server licenses was also asked when the base VM was created, and the answer depends on your existing licensing agreements.