The "root" (/), QOpenSys, and user-defined file systems (UDFS) in the integrated file system support the *TYPE2 directory format as of OS/400® V5R1.
The *TYPE2 directory format is an enhancement of the original *TYPE1 directory format. *TYPE2 directories have a different internal structure from *TYPE1 directories and provide improved performance and reliability.
Shortly after i5/OS™ V5R3M0 or a later release is installed, the conversion to *TYPE2 directories automatically begins for any of the file systems that have not yet been converted to support *TYPE2 directories. This conversion should not significantly impact your system activity.