The controlled Via pull-down is how you tell LinuxMCE what device will be responsible for controlling the A/V equipment. Normally this is the interface module and the Port will be the port number that you plugged the I/R emitter into. However if the device is being controlled by RS232, and you plug the device directly into a Core or Media Director, then the Controlled Via will be the Core or Media Director it is plugged into. If you are using the RS232 port on the interface module, then Controlled Via will be the interface module, and Port is the port number of the RS232 port.
You typically do not need to change the Entertainment Area box. This will only have an effect if you turn on 'Manually Configure Entertainment Area' as explained Rooms.
The 'Connected to' pull-down lets you specify your A/V connections. Let's assume you have a DVD Player and the video output is connected to the "VIDEO 2" input on your TV, and the audio output is connected to the "DVD" input on your receiver. You would add the DVD player, TV and Receiver on this page. Then for the DVD Player, choose the Receiver in the 'Connected To' column next to the 'A' for audio, and choose the "DVD" input. Choose the TV in the 'Connected To' column next to 'V' for video, and choose the "VIDEO 2" input. LinuxMCE will then know that when you are watching a DVD it needs to also turn on the TV and set it to VIDEO 2, and turn on the Receiver and set it to DVD. LinuxMCE will also know to forward audio commands (like Volume up/down) to the Receiver, and Video commands (like brightness up/down) to the TV. If you are using the TV's speakers for the audio, and not a separate receiver, then both the 'A' and 'V' Connected to would be the TV. If the DVD player required you to send a command to select an output (like DVI, S-Video, etc.), you would choose the audio and video outputs under the 'output' column. Most devices don't use the output column since most devices' outputs are always on.
There are also buttons to edit the Infrared Codes where you can specify what inputs, outputs and DSP modes a device supports.