Two separate tiers per habit: how loud the first reminder should be, and how persistent the repeats become.
Two axes instead of one
Before this release the tier of a habit was a single dial. You picked between Gentle, Time Sensitive, Persistent, and Live Activity. The problem: the loudness of the first reminder and the frequency of the repeats are two separate things that were trapped inside one selection. Now there are two pickers: one for "how loud should the first reminder be" (Gentle, Time Sensitive, or on iOS 26 a real alarm) and one for "how persistent should it get if I do not check in". Both work independently. Existing habits keep their behavior exactly. If you had picked Persistent before, you will see no difference.
Routine reminders can be time-sensitive now too
In Settings you can set morning and evening routines to Gentle or Time Sensitive separately. Previously only habit-specific reminders could use the time-sensitive channel. If you want your morning routine to break through Focus modes because it matters that much, you can now set it.
Preparing for real alarms (iOS 26+)
You will see a third option "Real Alarm" with an "iOS 26+" badge in the tier picker. It is visible but not yet selectable. The next update enables this option and it will then break through Silent Mode too, for anchor routines like medication or wake-up only. Apple does not require a separate application for this capability (despite rumors to the contrary), only an honest usage description in the app configuration.
Under the hood
The reminder system got a new routing layer (ReminderScheduler) that decides between standard notifications, time-sensitive notifications, and alarm mechanisms. None of that is visible to you directly, apart from the new pickers. But future versions can build on this without sprinkling AlarmKit branches across the rest of the code.