True bypass means there is a physical switch inside te unit that moves to close a bypassed circuit. The other type of bypass is commonly known as virtual or FET bypass. This is when there is some sort of transistor relay that will rout the signal through the pedal or to the output. In this case the signal is still passing through a transistor which can cause some coloration and/or signal loss (increasing the noise floor).
The advantage of virtual bypass as I see it is the silent switching. It can be engineered to produce no audible click in the signal and also the switch itself does not make a loud mechanical noise when switched (I learned this the hard way at a dance concert I played in).
The only other type of bypass I can think of is DSP bypass which will take place inside most multi-effects.
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