<type name="Klarna\Core\Model\Checkout\Orderline\Collector">
    <plugin sortOrder="100"
            name="klarnaKpCollector"
            type="Klarna\Kp\Plugin\Model\Checkout\Orderline\CollectorPlugin"></plugin>
</type>

This is a type configuration.

This configuration is for the base area. Base area configurations will apply to all the sub-applications.

This configuration also tells the object manager to use the Klarna\Kp\Plugin\Model\Checkout\Orderline\CollectorPlugin plugin class with Klarna\Core\Model\Checkout\Orderline\Collector objects.