If you look at the example from Kentico Dancing Goat, this would be a good sample site to look at. It has various products e.g. different coffees, accessories etc... All custom page types that sit under the Page Menu page type as the parent.
Page Menu page type, already by default from the Kentico installation has the 'Page type represent a product section' selected. It helps to structure the products.
So as it comes out of the box, it saves you creating Custom Page Types for the parent, but you don't need to use it if you don't want to, you can create custom page types instead and then select the option 'Page type represents a product section'.
The important part of selecting 'Page type represents a product section' is that when you go to the Products section in Kentico, Kentico knows to display your products in this organised way. If you look at removing this option for Page Menu item, you will see what I mean.
Hope this helps.