Looking at the QGIS help for another type of "New Database Connection" showed these
Name = A name to identify the connection settings.
Provider/DSN = The database server IP address or DNS name (not sure about this I got this from http://tinyurl.com/kjpqm6k)
Host = Name or IP address of the computer hosting the database server (leave blank for local connections)
Database = Name of the database (leave blank for default database on server).
Username = Database user name.
Password = Database password.
EDIT: In this question Mapperz says "Provider/DSN parameters not needed if you have a host."
The comments cover this pretty well, but I'll summarize them in an answer.
WKT is text and human readable. So use this if you want a human to read them (eg. for quick verification that the data is reasonable), or if you might want to work the data using text tools (eg. regex).
WKB takes up less space - so good for bulk storage. Also it is in theory at least, a little quicker to read/process for two reasons. First there is less data to load/transfer/cache, and second there is no text to parse. In most applications the potential speed difference is probably immaterial unless you are processing large amounts of data.
Best Answer
Import from kml with ogr2ogr can use either kml or libkml. You can read the specifications here:
http://www.gdal.org/ogr/drv_kml.html
http://www.gdal.org/ogr/drv_libkml.html
Everything not mentioned there will not get imported.
UPDATE:
The LIBKML driver is incorporated in GDAL Version 1.9.2 onwards, OSGEO4W packages, MS4W and Qgis Master.