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The video explains the concept of being a software contractor, noting that the term is often misunderstood. It aims to clarify what it means to be a contractor and what to expect. There are three main types of software developer contracts: 1. **Contract Employee** - Also known as an independent contractor, this role involves staff augmentation. You work exclusively with one client as part of their development team, performing tasks similar to full-time employees within a typical 40-hour workweek. 2. **Freelance or Project-Based Contractor** - This role focuses on finding short-term projects rather than committing to a single client for extended periods. The video discusses how to choose contracts that align with your work preferences.