Loot types are used for setting what items an item spawner can spawn. You may want to do this if you want to create a new item spawner type. Start by going to the E_LootType enum and click the New button to create a new loot type and name it.
To set an items Loot Type you can go to the LootSpawnList and add a new Spawner Type and set it to your new loot type like the image below. Now this item can be spawned by a spawner that has YourNewLootType in its Spawner Types.
To add the new loot type to your spawner go to the spawner blueprint (This blueprint will depend on what spawner you want to add this type to) then go to the class defaults and add the new loot type like in the image below, once done this spawner can now spawn items from the LootSpawnList that have YourNewLootType set in them.