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Similar to virtual products, downloadable products also don’t require shipping. They are available as a downloadable file with a specified path or URL. In most cases, there will be a limit on the number of downloads of such products. In a seemingly ironic way, WooCommerce allows setting shipping options for downloadable products. This is in fact to include the scenario where you want to send a packaged version (like a CD) of the product to the customer. If your product is only downloadable and has no physical version, you can mark it as a virtual product.
Similar to virtual products, you can tick the specific checkbox while creating downloadable products. An additional step while creating downloadable products will be to specify the file path and other details like user access restrictions.