That is a conf for the host system nginx, in which you enter the lemmy port defined on the left side of your proxy service's port section.
...
ports:
# actual and only port facing any connection from outside
# Note, change the left number if port 1236 is already in use on your system
# You could use port 80 if you won't use a reverse proxy
- "{{ lemmy_port }}:8536"
That is a conf for the host system nginx, in which you enter the lemmy port defined on the left side of your proxy service's port section.