The video below was created by John Hoff and published on his site at blogtrainingclassroom.com/blog. The author does a fine job of covering the different WordPress settings and explaining the different options available to you.

WordPress settings can be confusing if you do not understand the consequences of enabling certain options. This can also lead to ending up with settings that you really do not want because you do not understand what the options do.

Hoff probably wisely sidesteps getting into a full blown explaination of the different possibilities with WordPress permalinks. This is a complex subject at best, and I agree with the author that the best source of information for the subject is the WordPress documentation on permalinks.