A party is an entity that represents an individual or group in a CRM system, and acts as a central point for managing data about that individual or group. There are no 'party types': rather, hats and data sets are used to assign and organize related information about a party in a flexible way.
Examples of what you might use the party entity for:
- A sales lead
- A non-profit constituent
- A member of an organization
- An employee of a company
- A company or organization who is a member of an association
The party entity itself is fieldable, and can, if you want, contain basic information about all parties in the system. However, it's more powerful and flexible to use hats to assign data sets such as profile2 profiles, customer profiles, or user accounts to parties.