I can understand it can be somewhat confusing at first, but
hover your mouse over the relation in question, and SolidWorks
should highlight both the point and the other entity that that
point lay horizontal or vertical with.
It can be useful for keeping clarity in your sketches so there
aren't as many construction lines.
Though sometimes you will still want to make construction lines, if
for example, other people will be working on your model and you
want to make it clear (when they look at your sketches) that
certain entities need to be aligned.
If a point has a vertical relation, it is vertical in relation to some other point. A point itself cannot be simply "vertical".
I can understand it can be somewhat confusing at first, but hover your mouse over the relation in question, and SolidWorks should highlight both the point and the other entity that that point lay horizontal or vertical with.