I tried enabling "iPhone cellular calls" on my iPhone 5S, and the phone informed me that Wifi calling must be disabled to enable this feature. So it seems that the two features are not compatible with one another. Is this iPhone 5S specific? This is quite disappointing as I was hoping to have both enabled (cell service in my house isn't the best). It would be nice to know why they're mutually exclusive.
In the past, the modem software for a specific carrier was responsible for that prompt as their networks weren't able to re-reount the calls on the fly. (i.e. your carrier or carrier settings needing an update was the original issue)
I believe that window of limitation is resolved for all devices and all carriers. If you get this error in 2017, I would work with Apple support to make sure your iOS is updated and then work with carrier support to make sure your phone account is set up for seamless switch between carrier and wifi calling.
The iPhone cellular calls setting allows you to have other devices signed into your Apple ID use your iPhone's cell connection when they are nearby and on the same WiFi network as your iPhone. If you don't have strong cell service at the house, it's would be the opposite of useful. WiFi calling is the feature to leave enabled.
Edit: I realized the question was why are they mutually exclusive. My guess is it would cause issues if you tried to use another device to make a call from your iPhone, but your iPhone was in turn using WiFi calling.