HoMM3 HD is a mod (add-on) for the game Heroes of Might and Magic 3.

[+] (author - Sav) in the player's cities, if a Fortress is present, 2 levels of creatures will always be built, and in neutral cities - 1 level.

Indeed, it's a rather strange thing. Just like with the Quick option. The situation wasn't discussed either, and here you go.
If the intention was to introduce the construction of a second level in cities, why mess with the neutral ones? They always had a second level built, and that's how it should remain. And having a second level built for starting cities in HD+ should only be optional.