Hi Anandakiran,
I will try to explain in a very simple manner. Do not get he things complicated by terminologies.
Let's say you have a stock in warehouse, until it is settled \ transformed to final location\bin..etc you can to use it right? Because it's process that, when some goods has arrived in warehouse, it should go through some stages\process where somebody can not allocate it to new order\new documents.
That means, even though it is inside the warehouse, you can not use it! But all the goods are inside the warehouse, like say which is there in the final location\staging\Quality inspection..etc. Then how will system will be able to distinguish between these stocks? hence the stock type was introduced to distinguish the stock inside the warehouse by usable and not usable.
This is a old concept, existing in ECC\ERP. Now to map in EWM, they introduced availability groups.
Just, know that, there is a customizing in EWM where you map ECC and EWM stock type. Hence availability group also boils down to finding a way to distinguish the stock type. Hope I am able to explain the concept.
regards,
-Harsha