Damage types allow you a greater variety in your attacks. All creatures have more or less stronger sensitivities against one or more damage type. By using the weapon or spell of the right damage type, you can bring down your enemy much more quickly and easily.
There are 4 different damage types in Tibia: fire, energy, poison and physical.
Physical damage can be dealt out to almost all enemies. Have a look at the creatures section to find out more about the sensitivities and immunities of the single monsters and check out the spells section to see which attack spells belong to the single damage types.