When connecting to a server, it is nice to let the Window Manager know who and what you are. This way, if the user has the ability to query the Window Manager on which programs are running, they'll receive a nicer listing. Also, if one application wants to know what other applications are running, if they all stick to a good typing-convention, they can tell exactly if some particular type of program is running.
The current (tiny) list of prefered Application Types are:
See also: