You can connect to any git-based source control system using a username/password. You can find the instructions to add custom git connection here.
Utilizing the 'Custom Git' connection essentially means you have a git repo somewhere, not necessarily a Version Control System (VCS) compatible with Gearset as listed in the article above.
Due to this, there are several limitations when using a custom git repository over HTTPS/SSH vs the OAuth method of connecting into a VCS, which are outlined here (all based around the above concept of not having a known VCS to utilize):
You won't be able to 'Create a Pull Request' in Gearset at the end of a deployment to a branch.
Using that connection doesn't allow "Validate pull requests targeting the source branch" on CI jobs, so you won't get forward-looking validation child jobs against the org as a PR is opened and updated.
It cannot be used as a repository type to create a Gearset Pipeline, due to all the extra VCS interactions that go on behind the scenes with Pull Requests interactions, Validation, and Branch Protection checks (alongside many others).
You can still use CI Jobs to help automate the deployment of packages to orgs however.
If you do find yourself needing to restrict access to a specific repository in your VCS, which is a great benefit of custom git connections, you can consider linking in using the OAuth method and then leveraging restrictions on which repos are accessible from your source control system, which apply to the whole team. This will allow you to leverage the features above while still restricting access from all the repositories for your users.