Say I set base SDK to 7, what does it mean? It could mean that the app would run on iOS 7. But that's what iOS deployment target is for.
Also why do I specify those 3 values in both project and target. It doesn't make sense. Why specify the same thing twice?
In the iOS 7 TechTalk, session Architecting Modern Apps, Part 2, they explain this clearly
Good read Hi! I'm #available!
So, a modern App might use iOS 9 as the Target SDK, and iOS 7 as the deployment target. This means that you can run on iOS 7, iOS 8 and iOS 9, and that you have available to you any iOS 9 calls when actually running on iOS 9.
You can read more in my post SDK and Deployment Target