Anagha, 1) "Native" refers to binary. For type 3 and 4 drivers you can distribute a jar with .class files that can be run on any OS that supports Java. For type 1 and 2 drivers, you must get actual executable code for the OS you are using.
2) When type 4 drivers were introduced, not all vendors provided them. So people used type 3 instead. If you have both type 3 and 4 available, there isn't a scenario that I can think of to use type 2.
3) Type 2 drivers can be optimized for a specific OS/platform. This makes them faster. In practice, the database call itself takes even longer and the time difference doesn't have a noticeable effect on the system.