Playable Items
From GECK
Unplayable Items
Items that are not playable do not show up in inventories that aren't the player's. Beyond that, there are a couple differences between what the "IsPlayable" flag does for each type of item that can have it.
For Biped forms like Armor, the player cannot see them in the Pip-Boy, and as such cannot equip or unequip them normally, though it's still possible to put them on the player through scripts or console commands. They appear normally when dropped in the world.
For Weapons and Ammo, the player can see them in the Pip-Boy, and can equip/unequip them at their whim. When placed in the world, neither can be picked up, and no activation prompt shows up for Weapons (whereas one does show up for Ammo).