The Startup Disk control panel appeared as of System 4.2 (then called Startup Device) and was integrated (please verify) into the Control Panel. It became a control panel on its own beginning with System 7.
Before Mac OS X arrived, there were very few cases of installing more than one System Folder on one hard drive. Versions of the Startup Disk control panel prior to Mac OS 9.1 recognised only one System Folder per volume. The Mac OS 9.1 version recognised, for the first time in Macintosh history, more than one System Folder on one hard drive, thus enabling a switch to and from different versions of the Mac OS, including Mac OS X, on the same volume.
The selected icon in this control panel is the valid System Folder that will boot up a Mac. A different volume (icon) can be selected by clicking a different icon.