In biology, 'phenotype' refers to the observable characteristics of an individual, which result from its genetics (genotype) and from environmental influences. So a horse's phenotype includes its build, size, colors, patterns, modifiers, etc.
Horse Eden includes some special modifiers to your horse's appearance (an aspect of its phenotype), but doesn't include the genetics behind them. Different modifiers such as sooty and pangere are determined genetically in real life, but on Horse Eden we can't really breed specifically for them because we don't have the genes coded into the game. (They might be too complex, or not well understood scientifically yet).
So the phenotype was just a fun little addition to tell you if your horse is showing a modifier such as sooty or pangere, since those are shown in the art but not identified in the genetic test results. :)
Windy with Flurries
