The first menu is for adding a condition, then the condition appears as part of the text of the condition but also allows you to select a different condition if desired.
It is different because the second format is part of the text layout of the information. This is the same for Triggers Collections and Conditions.
For example:
If "This environment variable" was replaced with "Environment Variable Condition" then it would not read properly, and the variable field would need a label and so on.
So it is part of the visual style of Keyboard Maestro actions, attempting to read as a sentence.