What does this traffic sign indicate?

This blue circular sign indicates a mandatory bridle path. Riders on horseback are required to use this path. At the same time, it is reserved for riders, which means other road users, such as pedestrians or cyclists, are not allowed to use it. You correctly selected both relevant answers: that riders must use the path, and that others may not. Knowing this helps you recognize when a path is exclusively for horse riders, which is important for all road users to avoid violations.