Item Types will help you organize your price book. You can have as many Item Types as you want. You'll want to have this set up before you start adding items into your price book as its a required field to add an Item.
To add new Item Types, go to Settings, Pricebook, and then Item Types
The item types can be things such as Labor, Tasks, Parts, etc.
Tapping the orange Plus button on the top right will open a new popup window, and here you are able to create the new types.