The Type III optic is most often a variable-power (approx. 3-9x) with external target turrets and reticle features which can be used for holdover in a hurry. The original M/RT is the canonical Type III optic for the M4/M16 platform. It was designed in a small form factor and with less eye relief to better fit the geometry of the carbine. Leupold has a couple other M/RT scopes now, including the 2.5-8x36mm. If you can deal with a large optical package, you can step into more conventional sniper scopes, such as the Leupold 3.5-10x40mm Mark 4 or the most excellent Schmidt and Bender 3-12x50mm PMII.
In conclusion- think carefully about your mission and likely engagement requirements, and then pick the type of optic that solves those problems best. The Type I one-power red dot sight is the right choice for the vast majority of fighting with a carbine. The Type II is more specialized yet brings some useful capabilities to the table, whereas the Type III is really a very specialized application. Whatever you choose for your mission- get one of the solid battle-proven optics mentioned here. There's a lot of junk out there that will let you down sooner or later.
# 3. The S&B Short Dot's first-focal-plane (FFP) mil-dot reticle is used here to engage targets out to 425 yards.