Hi @Ren Higashida,
Thank you for posting in this community.
The Sites.Selected application permission is designed to restrict an application's access to specific site collections. However, it does not support listing all sites in the organization.
Instead, the Sites.Read.All and Sites.ReadWrite.All application permissions are required.
Yes, the Sites.Selected permission can now be set as a delegation type permission setting.
Initially, the Sites.Selected scope was only available for application-only authentication scenarios. However, as of February 2024, SharePoint supports delegated Sites.Selected authentication. This means that you can now use the Sites.Selected permission in scenarios where an application is consented to the delegated scope, allowing the application to access specific site collections with the minimal intersection of application and user permissions.
Reference: SharePoint now supports delegated Sites.Selected authentication.
I also checked in my environment and did have Sites.Selected in delegated permissions.
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