User defined data types created on the basis of system data types.

For example you need to use same data type in some of tables and you want to ensure that column has same data type, length and nullability. At that time user defined data type is useful.

 /* CREATE USER-DEFINED DATA TYPE */

CREATE TYPE ContactNo from varchar(20)

--OR

--EXEC sp_addtype ContactNo, 'varchar(20)', 'NULL'

/* DROP USER-DEFINED DATA TYPE */

EXEC sp_droptype 'ContactNo'

/* RENAME USER-DEFINED DATA TYPE */

EXEC sp_rename 'ContactNo', 'ContactNumber', 'USERDATATYPE'