Trying to buy a used car. What the heck is an "option contract"?

I'm getting all kinds of conflicting info from the interwebs so hoping you can all help out.

I have auto loan pre-approvals for a used car through and NFCU (interestingly, USAA had a better rate this time compared to when i bought my last car years ago, so I'm going to use them, even though NFCU gave me a draft check thing already.)

After cutting through the dance with the initial salesman and finally settling on a price, I said I was planning to put a down payment (via bank wire) then finance through my bank/CU. They said they couldn't let me drive off the lot unless everything was finalized payment wise with the institution (2-3 business days), and said that someone else could still buy the car in that interim (which doesn't sound legal, if I sign the purchase order?), but I was fine with waiting.

Anyways, that's when they started mentioning an "option contract" so I could drive off the lot same day. I interpreted it as doing financing with them instead of USAA, and they said I could just "pay it off in a few days with my bank".

The entire thing was confusing and felt shady af so I just walked out.

I assume there's a financial incentive for them if they are able to complete this "option contract" with a buyer, but I also read that it could be a way to secure deals/incentives from the dealer? But, if I go this route, do I need to do another loan application with NFCU/USAA/etc., or are my existing pre-approvals sufficient? In that case, wouldn't it be a refinance situation, as I'm now dealing with this new lender instead of the dealership?

Definitely wasn't this complicated compared to the first time I bought a car so I appreciate any clarity that can be provided.