Why "proxy_pass_header Server;"

I'm just starting on NGINX, and I have seen in several example configs that people use

proxy_pass_header    Server;

when proxy-ing the request to an upstream server? What exactly does it do here? What are the possible use cases?

It's telling the nginx service to pass the upstream's Server header instead of putting its own in the response. It's essentially cosmetic.

This is required for compliance with HTTP/1.1 which states that Server is an origin header:

If the response is being forwarded through a proxy, the proxy application MUST NOT modify the Server response-header. Instead, it SHOULD include a Via field