Cutout is used to create objects that do not require large geometry. For example, leaves, fences, grids, objects with holes.
For Cutout, you need to load a texture map, but it must be with an alpha channel and contain only black and white colors.
You may set the Intensity parameter in the cutout mode. When you increase it, the edge of the alpha channel begins to lighten, and edge artifacts are eliminated.
You can play around with different materials and their settings to create objects that we can see in real life. You can do so much with them. Just keep in mind that you are going to drain some resources using different materials and changing their parameters.