If so, does that mean 3 through 999 can be ignored basically?
If you don't need to set more than one type of source-to-target entity collision behaviour, then you can get away with just two EntityType groups - one for the target collision entity group, and one for the ellipsoid source collision entity group. You really only need to worry about setting up additional collision interactions if you actually find that you need to do so.
You may find that you do need to set multiple collision behaviours between different groups of entities, however. You may find that you need game characters to slide when they collide with level geometry, or with other game characters, for example. You may also find that you need bullets and other projectiles to stop without sliding when they collide with level geometry, or game characters. In this case you would need to set one EntityType for the level geometry; another for the game characters; and another for the bullets, and then use the Collisions command to set the various behaviours between the different sets of source and target entities.
Note that non-ellipsoid collision target entities need to be stationary for collisions with them to register.
eg.
Const ELLIPSOID_TO_ELLIPSOID_COLLMETHOD = 1
Const ELLIPSOID_TO_POLYGON_COLLMETHOD = 2
Const ELLIPSOID_TO_BOX_COLLMETHOD = 3
Const STOP_COLLRESPONSE = 1
Const SLIDE_COLLRESPONSE = 2
Const SLIDE_UP_COLLRESPONSE = 3
Const LEVEL_GEOMETRY_COLLTYPE = 1
Const GAME_CHARACTER_COLLTYPE = 2
Const BULLET_COLLTYPE = 3
level = CreateCube()
EntityType level, LEVEL_GEOMETRY_COLLTYPE
character = CreateSphere()
EntityRadius character, 1.0
EntityType character, GAME_CHARACTER_COLLTYPE
bullet = CreateSphere()
EntityRadius bullet, 0.01
EntityType bullet, BULLET_COLLTYPE
Collisions GAME_CHARACTER_COLLTYPE, LEVEL_GEOMETRY_COLLTYPE, ELLIPSOID_TO_POLYGON_COLLMETHOD, SLIDE_UP_COLLRESPONSE
Collisions GAME_CHARACTER_COLLTYPE, GAME_CHARACTER_COLLTYPE, ELLIPSOID_TO_ELLIPSOID_COLLMETHOD, SLIDE_UP_COLLRESPONSE
Collisions BULLET_COLLTYPE, LEVEL_GEOMETRY_COLLTYPE, ELLIPSOID_TO_POLYGON_COLLMETHOD, STOP_COLLRESPONSE
Collisions BULLET_COLLTYPE, GAME_CHARACTER_COLLTYPE, ELLIPSOID_TO_ELLIPSOID_COLLMETHOD, STOP_COLLRESPONSE