Two holiday types are available by default: Company Holiday and Statutory Holiday. If your organization uses Time Off only, then only one type is required. If your organization also uses Time Classic, then multiple types may be necessary if you need to apply different logic for the pay rule, based on the type of holiday.
For example, Mardi Gras may be a company holiday for employees in a region that celebrates Mardi Gras. Full-time employees would receive a full-day holiday, but part-time employees would receive a part-day holiday.