A popup menu will appear with a list of available node types. Choose one of the available types or edit an existing one. You can then edit the label. Nodes can have different types associated with them, which helps identify the purpose of the node. A standard set of types are provided, but you can change these with the provided type editor.
Every node has a popup menu associated with it.
The new type will be displayed underneath the node's label. Move the mouse to the other node, and click on it. The link will be created. When you drag either of the nodes, the link will follow it. To break the link between two nodes, you will have to invoke the popup menu on the link itself, which is accessed the same was as the popup menu for nodes.