Hi Srinivas,
In the domain model:
It's just to indicate if and where the data is persisted.
I agree it would be logical if this was listed on the documentation page about the Domain Model (https://docs.mendix.com/refguide/domain-model/), but it's only mentioned in the External Entity documentation (https://docs.mendix.com/refguide/external-entities/).
Kind regards,
Johan