What is ActionMailer default_url_options?

I must not understand something trivial about email but what does the host in defaul_url_options do? The need for the smtp settings make sense to me to configure how the email will be sent out but how is default_url_options relevant to that?

  config.action_mailer.raise_delivery_errors = true
  config.action_mailer.delivery_method = :smtp
  host = '<your heroku app>.herokuapp.com'
  config.action_mailer.default_url_options = { host: host }
  ActionMailer::Base.smtp_settings = {
    :address        => 'smtp.sendgrid.net',
    :port           => '587',
    :authentication => :plain,
    :user_name      => ENV['SENDGRID_USERNAME'],
    :password       => ENV['SENDGRID_PASSWORD'],
    :domain         => 'heroku.com',
    :enable_starttls_auto => true
  }