I searched the forum and didn’t find an answer, so I tried it out. When the must approve users setting is enabled, only mods and admins can invite new users to the forum. Users invited in this way are not added to the Pending Users list. If you visit the Admin/User page for an invited user, you will see that the user was approved by the staff member who sent the invite.
When the must approve users setting is enabled, the invite button is still displayed for regular users below topics, but there is only an option to invite existing users to the topic. New users can’t be invited.
The issue with the pending_users_reminder notification being sent for an admin user 7 months after the setting was enabled is a bit of a mystery. The only way that it should happen would be if the moderator who had received the notification hadn’t checked their notifications for 7 months.