I haven't used this exact model but have used the Dazzle brand which looks identical, you simply plug in the unit to your PC then the audio and video outs from your camcorder connect, open your video editing software and record away
just remember that AVI and MPG's are usually pretty huge files
Firewire 1394, if your camcorder has the port bring it right on in. If you want to get serious with it Adobe Premier is the way to go. Yeph it's a cluster to learn just like Photoshop but it'll do anything you want. A PCI Firewire card is no more then $40 for a 4 port.