Text = SMS
Chat = RCS, can be switched off in the Messages app settings (also has a link to more information at the bottom)
Basically, RCS was invented as a designated SMS successor by the mobile carrier industry to win back the revenues that they lost to OTT messagers like WhatsApp.
https://www.gsma.com/futurenetworks/rcs/
But since nobody is willing to pay for text or OTT messages anymore, the adoption of RCS (here in Germany it was called “Joyn” for a while) has been somewhat lackluster. Actually, Google is the only major proponent - even to such an extent that they’ve been rolling out RCS themselves in the U. S. because the carriers did not want to …