Difference between signature versions - V1 (Jar Signature) and V2 (Full APK Signature) while generating a signed APK in Android Studio?

Please select at least one of the signature versions to use in Android Studio 2.3

Now while generating a signed APK in Android Studio, it's showing two options (CheckBox) namely 1. V1 (Jar Signature) and 2. V2 (Full APK Signature) as Signature Versions in the last step of signed APK generating process.

So, what is the difference between V1 (Jar Signature) and V2 (Full APK Signature) in the new Android Studio update?

And which should I use (or both) for signing apk for play store release?

Also, I'm getting error Install Parse Failed No Certificates while installing APK when I use the second option.

It is a new signing mechanism introduced in Android 7.0, with additional features designed to make the APK signature more secure.

It is not mandatory. You should check BOTH of those checkboxes if possible, but if the new V2 signing mechanism gives you problems, you can omit it.

So you can just leave V2 unchecked if you encounter problems, but should have it checked if possible.

UPDATED: This is now mandatory when targeting Android 11.

Should I use(or both) for signing apk for play store release? An answer is YES.

As per https://source.android.com/security/apksigning/v2.html#verification :

In Android 7.0, APKs can be verified according to the APK Signature Scheme v2 (v2 scheme) or JAR signing (v1 scheme). Older platforms ignore v2 signatures and only verify v1 signatures.

I tried to generate build with checking V2(Full Apk Signature) option. Then when I tried to install a release build in below 7.0 device and I am unable to install build in the device.

After that I tried to build by checking both version checkbox and generate release build. Then able to install build.