If you create a Content Type with Element Type selected, it means you can create Elements with it. See Theme Structure to see where Elements go in the Plate Nested layout structure.
Elements are ate the bottom of the content tree, and fall below Columns. An Element is a small piece of inline content that can be added on a page.
Element Type theme files have the following paths:
elements/element_type_name/element_type_name.plate (default) elements/element_type_name/other_element_template.plate