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Stock picking type is a mysterious piece of thing for me. When creating a transfer it doesn't allow me to save it saying that you must choose stock picking type. The field is hidden in Other Information tab which is sometimes confusing when you just cannot save the transfer without having any obvious hint what is wrong. When you select a picking type there is a list of them which is more confusing. Items in picking type are usally like:
Warehouse short name/Location name: Receipt
Warehouse short name/Location name: Internal Transfer
Warehouse short name/Location name: Output
What does each of them mean?
When I choose them situation get's more confusing. It automatically overwrites my settings of Source Location and Destination Location and if I click on Save button Boom! It saves and I have no chance to Undo settings. For example I want to transfer from Warehouse A to Warehouse B. I choose the picking type as B/Stock: Receipts. It changes my transfer to Partner Locations/Vendors to Warehouse B!! The change happens silently and there is no warning message. I cannot edit that later! 
What is stock picking type and where can I create/edit/delete them? Thanks in advance.

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The picking type is an operation, if you check the settings of each picking type you can see how that specific operation does. For example, with the warehouse set to 2 steps, the pick takes two actions from the stock and delivers it to the output.
For editing or creating operations, go to configuration -> Operations types

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