Vanguard is asking what type of account you want to open to HOLD VTI (or whatever).
Accounts are your buckets. VTI is a Exchange Traded Fund or ETF, or more simple... a stock. You can't just go in and say "here is 1 bazillion dollars, I would like to purchase VTI" without having some sort of account to put it into. Think of it as if you walked into an ice cream parlor and told them you wanted two scoops of rocky road and they're asking you "what kind of cone would you like?" You need to choose the type of cone first.
Stocks, bonds, mutual funds... they have to go into an account of some type.
So types of accounts...
You are probably familiar with a saving account and a checking account? You may have both, but at least a checking account with a bank.
Vanguard (or any financial institution) have different categories of accounts, and fall into two main styles: retirement accounts and brokerage/investing accounts. The major differences are with retirement accounts, you have to have EARNED income (work a job, get paid, then that money makes it earned) to use them. Brokerage/investing accounts could be money your grandma gave you, winnings off a lucky card game, or earned income. Pretty much anything can be used to put money into one of those.
RETIREMENT ACCOUNTS: traditional or rollover IRAs, Roth IRAs, 401k, 403b, basically these have limits set by the government about how much and what kind of money you can put into them. All of them grow tax deferred, meaning you don't owe/pay tax until you pull money out of them. You can open your own traditional or Roth IRA and invest up to the government limits (I believe at this time, it is $6,000/year) as long as you made at least that much of earned income.
The number ones (401/403/etc) are only available to set up through employers, and they control who you are allowed to invest with (they pick the company and what funds/stocks/bonds) you are allowed to buy). If you own your own business you could open a solo 401k but they are still an "employer" related account.
So you have to figure out if you want to open an IRA (traditional or Roth) or a brokerage account with Vanguard. Both have advantages and disadvantages. Most folks end up with at least a few IRAs and a brokerage account. You may want to read more here:
https://www.irs.gov/retirement-plans/traditional-and-roth-irashttps://www.fool.com/the-ascent/buying-stocks/articles/brokerage-account-vs-ira-whats-the-right-move/