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There are few types of Ethernet but then also we have 2 bytes for Ethernet Type in the frame structure. Is this not a wastage of space by under utilization of space? I mean is 1 byte not enough to fit all the possibilities of Ethernet Types or is it some other reason?

Vaibhav Agarwal
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One possible reason is that those 2 bytes could be the payload length if LLC encapsulation. if length only 1 byte, then it's too small.

Also from the perspective of byte alignment, all fields (except payload) are at least 16 bit aligned.

user1500049
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Look at http://en.wikipedia.org/wiki/Ethertype. It's protocol definition of that frame