Folder to save in: Chooses the folder which the movies save to when you record them.
Video capture Hotkey: Defines the key you press to begin recording in-game footage.
Size Selection: Chooses for the video to be saved in half the resolution or full resolution of the original video file.
FPS Selection: Choose how many FPS Fraps chunks out of your game to use use in the movie. Basically, take the FPS you originally get and subract it from the number chosen here to get the speed of your movie. Higher FPS is better looking video, although may lead to extreme choppiness in recording, which is not something you want.
Cursor: Self- Explanitory
Sounds/No Sound: Self- Explanitory
Sound Device: Just always choose "Detect Best sound input"
I use Fraps all the time to make my CSS movies, and its great stuff. Very easy to use. Just as a warning- be sure you have a lot of disk space avaliable when recording, the files are saved un-compressed. You can get a taste of what video from fraps looks like with my CSS movies here:
http://www.youtube.com/watch?v=V5tvsMLwY1A#GU5U2spHI_4
http://www.youtube.com/watch?v=NyjKU965nbQ#GU5U2spHI_4
Oh yeah, the quality in those movies arent as good because the hosting service is terrible.