It varies with elements. For things like SNOW or LAVA, it determines what they turn into when they melt/cool. For variations of CLNE, it determines what element they produce. For the most part, if an element creates, changes or affects another element, CTYPE will determine which one. Usually you can set it by simply clicking on the element with the desired one selected (eg. clicking on CLNE with FIRE selected to make it clone fire), but for some things like SNOW you have to use the console