As far as I know it can be used for both "You are welcome" & "Excuse me". The developer only include "you are welcome" as the choice

yes. that is what it actually means ('forgive me' in its best translation)

However it is also a traditional answer to 'thank you' in the sense of 'don't mention it, I wish I could do more and forgive that I have only done so much'

no it cannot be used when greeting someone to your home because it technically does not mean 'you are welcome'

When thinking in English, it is a response to 'thank you' - which is 'you are welcome' in English, but not so in Arabic.

(thanking and the response to thanking are very unique to every language identity).

It means 'you are welcome' as a reply to 'thank you'.

A response to thank you.