It defines whether Apache should spawn itself as a child process (standalone) or keep everything in a single process (inetd). Keeping it inetd conserves resources.
The ServerType directive is included in Apache 1.3 for background compatibility with older UNIX-based version of Apache. By default, Apache is set to a standalone server which means Apache will run as a separate application on the server. The ServerType directive isn’t available in Apache 2.0.