In FME, a Feature Type refers to the source dataset schema or structure.
Every format used by FME identifies features through a classification scheme. This classification is known in FME as a feature type. Feature types are used to differentiate between different types of features (for example roads, rivers, buildings, contours).
The feature type for any particular format is listed in the FME Readers and Writers manual under the "Format Quick Facts" section (see FME Readers and Writers Reference under the Workbench help menu).
Some examples are:
In MicroStation Design File (DGN) format, each level is a Feature Type.
In AutoCAD Drawing File (DWG) format, each layer is a Feature Type.
In Smallworld format, each class is a Feature Type.
In ESRI Shape format, each file basename (*.shp file) is a Feature Type.
A Feature Type is contained within a dataset.
When you create a workspace using a dataset, the Feature Types present in that dataset are shown on the left-hand side of the workspace canvas: