Do I need UK Transit Visa from India to USA with valid US Visa
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The UK has two kinds of transit visa. Direct Airside Transit Visa has a 24 hour limit and will not let you come through immigration - so you can't use it if you want to change airport or go sightseeing. Visitor in Transit has a 48 hour limit and allows you to go through immigration. You can use your 48 hours for sightseeing, visiting people, or anything else that it is allowed to do on a tourist visa. The difference between these two is probably the reason it asked if you 'wanted to go sightseeing'.
Most hotels are 'landside', meaning you have to go through immigration to reach them. So you would need a VIT to reach them.
As you say, you qualify for transit without visa, which has the same rules as Visitor in Transit. Theoretically the immigration official can still deny you entry, but unless you've done something wrong or are a threat to the UK it's very unlikely. You can still apply for a Visitor in Transit visa if you like.
This website gives you the qualifications for a Visitor in Transit without visa.
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