This activity is used to define an Event, which can be used in Event Entity Configurations. A number of standard events for e.g. status changes are delivered out of the box, but you can add your own custom defined events to cover additional scenarios, as required.
It is possible to optionally link an Event Type to an Event.
If you enable the Entity Specific option, the Event Entity Configuration setup requires you to specify which entities the event is applicable for. An event can be applicable for multiple entities. An event that is not Entity Specific can be used on any entity and a record will automatically be created in the Event Entity Configurations with a '*' in the entity.