Here's what the JPA2 specification says about this attribute:
The transaction-type attribute is used to specify whether the entity
managers provided by the entity manager factory for the persistence
unit must be JTA entity managers or resource-local entity managers.
The value of this element is JTA or RESOURCE_LOCAL. A transaction-type
of JTA assumes that a JTA data source will be provided—either as
specified by the jta-data-source element or provided by the container.
In general, in Java EE environments, a transaction-type of
RESOURCE_LOCAL assumes that a non-JTA datasource will be provided. In
a Java EE environment, if this element is not specified, the default
is JTA. In a Java SE environment, if this element is not specified,
the default is RESOURCE_LOCAL.
And here is what it says about JTA and resource local entity managers:
JTA EntityManagers
An entity manager whose transactions are controlled
through JTA is a JTA entity manager. A JTA entity manager participates
in the current JTA transaction, which is begun and committed external
to the entity manager and propagated to the underlying resource
manager.
Resource-local EntityManagers
An entity manager whose transactions are
controlled by the application through the EntityTransaction API is a
resource-local entity manager. A resource-local entity manager
transaction is mapped to a resource transaction over the resource by
the persistence provider. Resource-local entity managers may use
server or local resources to connect to the database and are unaware
of the presence of JTA transactions that may or may not be active.