You can define as many item types as you want.
The item types are the "categories" into which your library items fall. For instance, you probably want to have videocassettes in a different category from non-fiction books, and mysteries in a different category from children's picture books. If you already are using a commercial ILS, you almost certainly already have all of your materials divided up into such categories. Now you need to tell Koha what your categories are.
The itemtype code is limited to four characters. This code is rarely displayed by Koha; instead the description of the type will be what users see.
"Rental charge" is any amount you might charge to users for borrowing items of a certain type (like videos).
"Renewals allowed" indicates how many times an items of this type may be renewed.
Item types are useful for many things, and very important in controlling how Koha works :
Setting up item types is one of the first things you should do after installing the Koha software.