Many students need to target more than one of the above. For example, a student targeting category 2 may not be able to find a safety among those schools, due to most such schools being highly selective (unless s/he lives in a state with good in-state financial aid at in-state public schools), and may need to look in the other categories for safeties.
Category 1 can also include starting at a community college aiming to transfer to an in-state public later. In some states, this is a common pathway for those with low financial resources and not-strong-enough high school credentials to get category 2 or 3.