Player has a default backpack for storing items.

Equipping a backpack will get you some backpack expansion.
The expansion will grant extra slots and allow you to equip more items.

Tool Backpack is a special kind of expansion in a way that only tools like chopping axes, pickaxes, fishing rods and skinning knives can be stored inside.

VIP Backpack is acquired after the VIP subscription. Which grants you additional slots for storing items.

Companion Backpacks can also be quite handy in storing items.

Quest Backpack is only used for storing quest related items.