With "Prefer Google Profile Photos" enabled, Google profile photos will be chosen over Google custom contact photos when syncing contacts to iPhone.
Google profile photos are the photos that your contacts have chosen for themselves. Google contact photos are the photos that you have assigned to your contacts.
See photo below demonstrating an example of a Google contact photo and a Google profile photo.
This help article relates to the iPhone app called "Contacts Sync" which can be downloaded here:
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