Many users are in a hurry and / or tend to follow their own thoughts or rules instead of reading the quick guide or at least following the lead dialogues displayed by the app.
For the first type of conversion -'FCPX Titles'- a Motion Template is needed, otherwise FCPX would not have any idea how to treat.
The user can create one by herself/himself or choose one from the list of templates which come along with the app.
If you don't know how to create templates have a look at the manual or choose a build-in template.
With the second choice -'FCPX iTT Captions' - no Motion Template is needed.
Captions are not burned in titles but when embedded in the movie can be switched on or off by the viewer.
Font, font size will depend on the player and will be created on the fly.
iTT though can't be be embedded. If your captions are in English, Dutch, French, German, Italian or Spanish you can convert them into CCEA Closed Captions inside FCPX.
iTT captions can be converted to WebVTT with my X-Title Caption Exporter. WebVTT can be used with HTML5 players on the web.