When this Special Application Control Directives is assigned to an user or a group, it will overrule the global setting for Strict or Relaxed Application Control.
The group Administrators have "File Explorer" assigned, and the directive "$aad Apply Relaxed Control", implying that members of Administrators are not limited / restricted by AADS Application Control.
This is a minimal collection of Applications and Directives. The result of this is a default Windows desktop with no restrictions for the members of the group Administrators:
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