Chips are boolean properties shown as small blocks of color that sit within your item to illustrate an action.
For example, you might include a chip on a leave request to illustrate whether it's a paid leave type or not. It's good practice to use chips to highlight exceptions rather than norms. For a leave type, it would be more likely to have a chip to represent 'unpaid' rather than 'paid' as 'unpaid is less usual.