It’s just a custom name for a tracing channel so you can isolate what this widget interaction component can interact with. You can add 16 or so (?) channels, have them Ignored, Overlapped or Blocked.
And yes, you found the right place. You can also define new object types the same way.
It’s all for collision / tracing purposes. Nothing to do with widget components per se.
Since VR relies heavily on widget comps for UI interaction, it’s nice to have a dedicated channel that allows you to hit widgets only.
Depends on what you want to create. New channels are where you found them. Widget components that can use them are added to actors and can automatically instantiate widgets and have them live in world space.