<type name="Klarna\Core\Model\Api\Rest\Service">
    <arguments>
        <argument name="log" xsi:type="object">
            Klarna\Core\Logger\Logger
        </argument>
    </arguments>
</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 tells the Object Manager that when a user wants a Klarna\Core\Model\Api\Rest\Service object that the following arguments should be used in the foo object's constructor.

• $log = new Klarna\Core\Logger\Logger (...)

<preference for="Klarna\Core\Api\ServiceInterface"
            type="Klarna\Core\Model\Api\Rest\Service"></preference>

This is a preference configuration.

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

This preference configuration tells the Object Manager when a user wants a Klarna\Core\Api\ServiceInterface object that it should return a Klarna\Core\Model\Api\Rest\Service object.