The only place I have see them used is on the pricing module.  You can set discounts and markups based on customer type

Thanks Mike. Yea, I have seen them used there too. I'm looking more to know if there is a place to define the Customer Types and what the resulting discount or markup would be. 

For example, I want a Customer Type 1 to get 10% discount, and a Customer Type 2 to get a 20% discount. I'm looking for How/Where to set that up?

IC Items and Prices lists >> Item Pricing.  go into an item, for into a price list, go to Discount page and look at the "Price determined by" drop down.  Change that to Customer Type and that's where you can setup different rules.

It's not like there is a master "A=10%, B=15%" type thing.  You set them for whatever you want on any item on any price list.  They can all be different.   It's just an option to give you different ways to set discounts.