Record type assignment and the Master record type
Key Takeaway
A profile assigns either Master or custom record types, never both. Permission sets and permission set groups can assign only custom record types. The combination a user has decides what happens when they create a record.
Record types let different users work with different page layouts and picklist values on the same object. Record type assignment decides which record types a user can choose when creating or editing a record. The Master record type is the system-generated record type a record gets when no custom record type applies.
Master and custom record types
Master is a placeholder record type assigned when the org is created. Every other record type is a custom record type.
If an object has no custom record types, its record type settings in the profile are blank. All records of that object then use the Master picklist values and default value.