A pattern is a fill type, not a texture
On the Fill row of the Appearance panel, Pattern sits beside Solid Color, Linear Gradient, Radial Gradient and No Fill. Choosing it swaps the color controls for a preset picker and its parameters, and the shape keeps every other property it had - stroke, opacity, filters, transforms.
What lands in the file is a <pattern> definition and a url(#id) fill reference. It scales without blurring, weighs a few hundred bytes however large the shape is, and stays editable in any other SVG tool.
Every preset is parameterized
Foreground and Background set the two colors. Scale changes the tile size, and Rotation turns the tile without turning the shape. Presets that have their own geometry add a control for it: Line Weight for the stroked presets, Dot Size for Dots, Amplitude for Waves and Zigzag.
Position is edited on the canvas rather than in the panel - the panel says so: "Enter Edit mode to rotate and resize pattern." That puts handles on the tile itself, which is the fastest way to line a hatch up with the artwork it belongs to.
Imported patterns keep working
A pattern that arrives in an imported SVG is preserved as authored rather than approximated by the nearest preset - it is marked Custom, keeps its own tile markup, and round-trips on export. That matters because a hand-authored pattern can contain any SVG at all, including images and nested references that no preset list could describe.
Where patterns live
The Library panel's Patterns tab collects every pattern definition in the document alongside the Symbols, Markers, Gradients and Filters tabs, so a pattern applied to one shape can be reused on another without rebuilding it.