What is the Parent Combobox feature?

The Parent Combobox allow a user to define a parent child relationship between two separate Combobox Custom Fields. This will result when a value is selected from the Parent Combobox that the Child Combobox will populate with List Values that have been defined are related to the value selected in the parent. The video above demonstrates an example of this.

Can I create a Combobox relationship with a Project Insight default field (ex. Project Type)?

No, the Parent Comboxbox feature only works with custom fields (user defined fields) and only with the Input Control "Combobox".