Yes, this is filtered by a domain, you could search for partners that are customers, or suppliers or employees or companies using this fields in the res.partner model

'customer': fields.boolean('Customer', help="Check this box if this contact is a customer."),
'supplier': fields.boolean('Supplier', help="Check this box if this contact is a supplier. If it's not checked, purchase people will not see it when encoding a purchase order."),
'employee': fields.boolean('Employee', help="Check this box if this contact is an Employee."),
'is_company': fields.boolean('Is a Company', help="Check if the contact is a company, otherwise it is a person"),

---Update--- How the specific fields get a True value using a menu or another

For example the suppliers partners are created using the menu suppliers in Accounting menu or in Purchase menu because of the use of a context value default_supplier with value 1 that makes that every Partner created using that menu get the field supplier with value 1 and finally True.

As a rule of thumbs always that you define a value in a context with a field name prefixed by "default_" you are giving that value for the field(if exist) of the model form that will be opened using that context. This could be used in the xml for actions, buttons, relation fields like many2one, many2many or one2many, or in the returned actions of buttons. It's like defining the default value for the field but in xml. Take this example from the supplier menu in base, this is the action definition:

<record id="action_partner_supplier_form" model="ir.actions.act_window">
    ...
    <field name="context">{'search_default_supplier': 1,'default_customer': 0,'default_supplier': 1}</field>
    ...
</record>

For the sake of completeness the sames applies for the prefix value 'search_default_' use that it will select the filter field in the search view by default, like the supplier filter of the search view of the partners model defined like:

<filter string="Suppliers" name="supplier" domain="[('supplier','=',1)]" help="Supplier Partners"/>

That filter will be applied by default too. All of this will be done by the use of the 'default_' and 'search_default_' in the context always followed by a field name for the 'default_' and a filter name for the 'search_default_'