Types refer to different elemental properties associated with both individual pokémon as well as the "type" of moves they use.
For example, Squirtle is a Water pokémon. Being a water pokémon means that any damage moves that affect Squirtle will be amplified or nullified in effect depending on the type of that attack. For example, an Electric attack will be "super-effective" versus Squirtle (he takes twice the normal damage), while a Fire attack will be "not very effective" (he takes only half the normal damage).
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