Here's the definition I found on text type at help.sap.com:
"Text types represent different structuring options for texts used in purchase requisitions and external purchasing documents."
I'm afraid it isn't very clear.
From what I've understood, you create a text type for a sales document depending on which part of the document you want the text to appear. You may create a text type for the ordering party level and another type for the procurement level.
The same goes for a customer master record: you can create a text type for the address level and another text type for the contact person level.
Am I correct?
Also, could you give a clearer definition of text type?