A “chat model” is an LLM that is trained to respond in a conversational format. Because they should be able to answer general questions and generate complex code, the best chat models are typically large, often 405B+ parameters.In Continue, these models are used for normal Chat and VS Code actions. The selected chat model will also be used for Edit and Apply if no edit or apply models are specified, respectively.
If you prefer to use an open-weight model, then the Gemma family of Models from Google DeepMind is a good choice. You will need to decide if you use it through a SaaS model provider, e.g. Together, or self-host it, e.g. Ollama.