What is a content type? A content type essentially at it's core is a grouping / set of meta data with a specific purpose. For example, a Task within SharePoint is a grouping of the fields which would be needed to track a Task. By creating a Content Type you can create custom "groupings" of meta data for your specific needs. As an example, you could create a content type for "Point of Sale Report" and attribute all of your meta data to that content type.
The real question is why use them? By utilizing content types you can leverage your specific "groupings" and use them across lists and libraries across your sites. The Content Type will allow you to have better control over your document management capabilities by attributing the corresponding IRDS (Information Retention & Disposal Schedule), creating views based upon the Content Types, and by creating workflows specific to that specific content type.
All of these benefits for content types or helpful, but by automating your IRDS you can make sure that you are always compliant with the Laws, reduce the amount of file space you are utilizing, and save countless dollars in discovery if there is ever a litigation issue. The creation of content types help to reduce the amount of Null values in your list or library as well. By better targeting the Content Types, your users are not having to leave blanks which do not apply to them with the notorious "catch all form."
I hope this was beneficial to you!
Regards,
Dan
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