Any item can belong to zero, one or more categories. These categories (or item types) are defined in the Types tab.
An Item Type is identified by the concatenation of the ID and the Name. These should be unique across all other Types and can contain a "/" character to indicate being a sub-element of another item. In the example above, Swords and Helmets are sub elements of Equipment.
Item Types can be used for a wide variety of reasons. One of them is using a Type to define which items are equipable and where can they be equipped.
Another use for Types is to organize the Player's inventory UI. You can choose to show specific items that belong to a category or multiple categories.