The backup_on_install is the directory where is saved the files that are present in Joomla at the moment of the installation and before any patch installation.
The backup directory is the one where JMS put backup each time you try to install the patches.
If you delete those folder, this mean that you will loose the files before the patches.
You can do that but that means that when you will try uninstall patches or JMS you will have error messages.
Normally, this is not critical as the patches are designed to be inactive when some environment parameters are not present (the case when JMS is not present).
In fact, when the environment parameter is not set by JMS, you are working as master website.
A master website is the website where JMS do nothing.
The problem if you delete the files is that if JMS wants to perform a new backup, it could backup a file containing the JMS patches.
I repeat this is not critical as it will be in general inactive
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