Assigning a segment manager to a disk means that you want the plug-in to manage partitions on the disk. In order to assign a segment manager to a disk, the plug-in needs to create and maintain the appropriate metadata, which is accomplished through the "disk type" option. When you specify the "disk type" option and choose Linux or OS/2, the plug-in knows what sort of metadata it needs to keep and what sort of questions it should ask when creating partitions.
An additional OS/2 option is the "disk name" option, by which you can provide a name for the disk that will be saved in OS/2 metadata and that will be persistent across reboots.