There are a few types of product:
Normal products: These are simple products with no variations in size or colour. They can be tangible (such as a coffee mug) or not; for example a service such as “Setup fee” could be a normal product. The former must have “manage stock” set to yes and the latter must have it set to no since there is no stock quantity and no asset value.
Bundles: These are product holders; a combination of other items that may have a different name or price. As they only point to other products, they have no stock or asset value and cannot be added to Purchase Orders. They are used for assemblies, package deals and so on.
Complex products: These are items that have more than one option, such as varying sizes, colour or specifications.