Text and description quoted verbatim from Microsoft DirectX 7 help file, included here for convenient reference.

The D3DLIGHTTYPE enumerated type defines the light type. This enumerated type is used with the D3DLIGHT7 structure.

typedef enum _D3DLIGHTTYPE {
D3DLIGHT_POINT = 1,
D3DLIGHT_SPOT = 2,
D3DLIGHT_DIRECTIONAL = 3,
D3DLIGHT_FORCE_DWORD = 0x7fffffff,
} D3DLIGHTTYPE;

D3DLIGHT_POINT
Light is a point source. The light has a position in space and radiates light in all directions.
D3DLIGHT_SPOT
Light is a spotlight source. This light is like a point light, except that the illumination is limited to a cone. This light type has a direction and several other parameters that determine the shape of the cone it produces. For information about these parameters, see the D3DLIGHT7 structure.
D3DLIGHT_DIRECTIONAL
Light is a directional source. This is equivalent to using a point light source at an infinite distance.
D3DLIGHT_FORCE_DWORD
Forces this enumeration to compile to 32 bits in size. This value is not used.
Remarks
Directional lights are slightly faster than point light sources, but point lights look a little better. Spotlights offer interesting visual effects but are computationally expensive.

Parallel-point lights are not supported in DirectX 7.0 and later. Therefore, this enumerated type does not contain the legacy D3DLIGHT_PARALLELPOINT member.