An example of using this would be if you wanted to automatically set the Type of a Company to "Customer" when an Opportunity becomes "Closed Won".
There are two parts to the configuration of this feature, both are accessible by going to Settings->Configuration
Set up the sales stage to company type mapping. Go to Settings > Configuration > Sales Stage Company Type:
This displays the following screen where you can select the opportunity stage in the left drop down and then the corresponding company type which you want to be set on the linked company when the opportunity reaches that stage.
You can see in this example, we've decided to have the Company Type change to "Customer" when an Opportunity is marked as "Closed Won" and to "Former Customer" when the Opportunity is "Closed Lost".
You need to then enable the feature. Go to Settings > Additional Settings > Opportunity Settings and look for and enable the following setting: