This option will allow custom animation controllers to be used in both Humanoid and Generic avatar rigs. In this dropdown menu,
where you can choose Male, Female, and None, I suggest adding the Custom option or a VRChat component for it, where then you can specify your own animation controller to use and can make more intricate and complex controllers that support various things from blend-shape falling animations, custom gesture usages, and more. Currently, the only solution is to use generic avatars and to use your own animation controller based on the one in the example assets but not all parameters are used or given (like look angles, gesture values) but emotes, movement, and such are. Examples of things I have been trying to do:
Unfortunately the first example does not work in the game because that parameter is not set but it can create a wider variety of character animations and people will be able to run sequenced animations, masked animations (like gestures, on top of any playing animations, so unlike emotes), and so on. Also, seemingly, you cannot use these on humanoid avatars because even with 'none' as the animation set, it will not use the controller I had set up. You would be able to even make toggles that change the animation style of characters, add your own gestures to characters, use look values to rotate character bodies, and others.