Passage sets are used where doors do not need to lock, commonly used for general access doors such as hallways, closet doors, laundry doors etc.
A privacy set is used for interior door handles for use on doors of private rooms that need to be locked and require a latch and a simple locking feature. Commonly used for bedroom doors, bathroom doors, etc.
A dummy handle has no latching or locking function. It is surface mounted to a door simply to give the door a handle to pull it open. Dummy handles are usually used on closet doors, bifold doors, or other doors where no latching or locking function is needed.