$:/core/Filters/TypedTiddlers collects one tiddler per distinct type, and the inner list then finds every tiddler sharing that type.

The two lists do different jobs:

• the outer filter ends in each[type], so it yields one representative tiddler per type rather than every tiddler
• the inner filter reads {!!type} from that representative, so currentTiddler is what carries the type from the outer list to the inner one

This is the code behind the Types tab in the sidebar, under More. Open that tab to see it running over a real wiki.

The five dummy payload tiddlers below are the only ones here with a type field, so they are exactly what the list finds.