The persistent settings stream is a config file that is automatically created in the cluster when you edit one of the parameters on a node's admin console (log settings, log host, FVR suspend, etc) or after the first reboot is completed. When a settings change is made on a running node, the persistent settings stream is created and then a message is broadcast to the rest of the nodes telling them the new settings and persistent settings stream UUID.
The purpose of this stream is to provide a mechanism to configure certain settings on all nodes in the cluster at once, and to provide those same settings to any new nodes entering the cluster. If a persistent settings stream is known to the cluster, any new node coming online will be told about it by the town crier and will pick up those settings as well. As Swarm code has evolved, more and more settings that were previously in the cluster.cfg/ node.cfg file have been placed here. That allows for dynamic settings changes without requiring a reboot.
Any settings that exist in the PSS will override commensurate settings in the cluster.cfg/ node.cfg file as soon as the node finishes initializing during boot time.