Beginner - no Occupations or Minor Improvements.
Normal - all Occupations and Minor Improvements.
Competitive - all Occupations and Minor Improvements, except for those on a "banlist" for being too strong or game-warping for competitive play. (This was implemented with approval of the game publisher).
"Friendly" is a different setting which applies to all games on Board Game Arena. It's in the time settings. In Friendly mode, there are no time limits for your turn, you do not gain or lose elo, and there are no penalties for quitting the game.