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It's a string that's used to group resources of the same type. Afaik the only place it's used is to compose Pulumi URNs.

See this page: it's called "resource-type" in the first example of a URN.

Also, is extending `ComponentResource` the way to group resources together similar to how a AWS `cdk.Stack` does? Specifically, I'm looking to create a class that contains some resources like `s3.Bucket`s.

ComponentResources are for doing exactly this. And that's why the type token is required.

It allows you have (for example) a bucket and a bucket policy with the same name.

You'd end up with two URNs which are very similar, but one would have "aws:s3/bucket" and one would have "aws:iam/policy" or similar