A modulator track is simply a track that alters the behavior of another track, in a process called modulation. To make a modulator track operational, you must connect it to one or more target tracks, via the Modulations bar or the Track menu's Modulation command. In most cases, you'll want to prevent a modulator track from outputting MIDI messages, which you can do by changing its track type to "Modulator." A modulator track's steps typically contain values that only make sense in the context of a particular modulation type, in which case also interpreting those same step values as note velocities or controllers would be unhelpful. One possible exception is a note track gating another note track via mute modulation, in order to prevent collisions between them. But in general, creating separate "Modulator" type tracks is the most flexible method of setting up modulation sources.
It's recommended to give modulator tracks a small negative time offset, so that they're slightly ahead of their targets. This avoids races and track order dependencies.