A forecast type is a calculation recipe that turns the same pipeline into a projected-sales number from one business angle: which object to read, which field to add up, which date puts a deal in a period, how to group the rows, and which hierarchy rolls totals to managers. Admins create and activate types so reps can switch perspectives on the Forecasts page, such as whole-deal amount by close date versus product-family revenue by schedule date versus a territory rollup, without changing the underlying records. Salesforce provides a default Opportunity Amount-by-close-date type on the user role hierarchy; you can customize that type or add others, with at most four active at once.