Type: Refers to the type of product (literally), for example, if you're importing a backpack, tablet, and/or sneakers, the type you could list each respective product as "Bags", "Computers", and "Shoes". Make sure you use a specifically targeted type, so you (and eventually your customers) can search for these products later on.
Tags: Are keywords used to organize search results on your online store. For example, if you import a mug you could add the tag 'Winter'. Then you could also add the same tag to relating products - that way if a customer searches "Winter" in your store, the mug and other products with the tag 'Winter' will also show.
Other tags you might want to use for the mug include :
- Winter Sale (if you're running a sales campaign on your store)
Keep in mind it's important to be strategic when choosing tags because if they're misleading or inaccurate, it can hinder a product's search optimization.
Another purpose for tags is to categorize products in Shopify collections. Here you can create groups of items such as products from particular manufacturers, products with similar shipping methods, products for an event, etc.
If you're operating a large store with dozens (if not hundreds) of products, it's recommended you use a common tagging format to efficiently organize products.