A Pixel-based layer will show the pixels being used in the thumbnail preview. The entire thumbnail will be filled with pixels like an image. Or only a part of it based on how many pixels make up that Layer. If only a portion, then the rest of the preview will have a transparent background (made up of different colored squares).
Every Layer you create requires pixels to form your image or designs. Even a text layer is pixel-based. I make this distinction for those coming from Photoshop. Text and shapes in Photoshop are vector-based.
Vectors allow elements in a layer to be resized without a loss of quality. If you create a shape layer and resize it larger, it will become pixelated. This may change with the release of GIMP 3.0+ since shapes are on the roadmap for implementation.