Selecting the Random Survivor/Killer in the character select screen will equip these characters based on what option you chose. You can have both equipped at once. In the lobby, the glowing red/blue guy will be in place of the character in the lobby, and once the game starts, it will change to a random owned character. Once you get a new Killer/Survivor, it is possible to play as them with the Random choice. You CANNOT use this to play as characters you don’t own.
Random Survivor unlocks when you get your second survivor Random Killer unlocks when you get your second Killer