The digital product option does not appear in sales->settings.
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To create a product that can be sold from your Website, you can open the Website/eCommerce/Products to create a new one.
On the product form, under the "Sales" tab, make sure that the product is Published under the eCommerce section:
This will make the product available on the Website, and thus, a digital product. For further configurations regarding eCommerce products, please refer to this link: https://www.odoo.com/documentation/19.0/applications/websites/ecommerce/products.html#products
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I'm not aware about any 'digital product' option in Odoo. Where did you find that or what are you referring to exactly? Are you talking about 'Deliver Content by Email' (Settings- > Sales -> Product Catalog)?