Based on my experience with SH5 thus far this is referring to the overall skin of the boat.
it would appear that some historically accurate skins have made it into the game, such as U-404's conning tower skin.
which was a large red viking boat prow like this one
other skins are more similar to this...
you also have the option of adding a personal emblem just like in SH3.
so far the options seem limited as far as default goes