At least on the en-wiki implementation, the difference between "string", "line", and "content" is not particularly clear, and the documentation table doesn't help very much. Would it be possible to clarify it further?
Topic on Extension talk:TemplateData
It appears like that page was a little outdated. I updated it. You can find much more details on the pages Extension:TemplateData#Param object and Help:TemplateData#Type parameter.
Thanks! I still don't feel like I have a full sense of things (maybe some examples could help?), but the line breaks note is definitely an improvement. Good luck with your work on this!
The words "String" and "Line" mean whatever those words mean to coders. "Content" means what an editor thinks it means (approximately "anything goes"). The distinction is mostly not enforced by software (yet, but I've been saying that for years, and I expect to be saying that years from now).