Improve application settings API

What does this MR do?

Improve application settings API.

See also the related !30909 (merged).

No doc needed yet, as this is fixing the behavior according to doc.

Does this MR meet the acceptance criteria?

Conformity

• Changelog entry for user-facing changes, or community contribution. Check the link for other scenarios.
• Documentation created/updated or follow-up review issue created
• Code review guidelines
• Merge request performance guidelines
• Style guides
• Database guides
• Separation of EE specific content

Performance and testing

• Review and add/update tests for this feature/bug. Consider all test levels. See the Test Planning Process.
• Tested in all supported browsers

Security

If this MR contains changes to processing or storing of credentials or tokens, authorization and authentication methods and other items described in the security review guidelines:

• Label as security and @ mention @gitlab-com/gl-security/appsec
• The MR includes necessary changes to maintain consistency between UI, API, email, or other methods
• Security reports checked/validated by a reviewer from the AppSec team