Settings and preferences are all stored in your user account, not the program files. They are version specific and each version has its own main preferences folder in your user account.
All these preference folders and files are created from scratch as you start using the application. Deleting it all will return the application to fresh factory defaults.
There is an option to migrate preferences when updating. While convenient, I would actually advise against that. I never do it. Settings may not mean exactly the same thing in the new version. And even if they do, the context may be different.
But most importantly, preferences are prone to corruption because they are rewritten in their entirety every time you exit the application. Small errors tend to accumulate. This is in stark contrast to program files, which are read-only.
The preferences contain everything relating to the configuration of the application, not just your own (conscious) preferences. Corruption can cause erratic, inexplicable and odd behavior.
So I always prefer to start a new version with clean sheets.