The first form of the command is used to build new client directories. client is the name of the client you are building this directory for. The -s option will cause server to be used as the name of the server in the client's /etc/fstab file.
The second form of the command takes an existing /private directory and prepares it to be used in a bootable system. Before any modifications are made, /private is copied into /usr/template/client on the new disk to be used as a template for new client partitions. The disktype parameter specifies the type of disk the new /private is on, and devroot is the path to where that new disk is currently mounted.
/private/etc/fstab* Fstab files for different disks. /private/vm/swapfile Swapfile that gets preallocated. /usr/template/client New client template directory.