ok, tooltip is the little yellow box that shows a description when you hover over an icon. You should notice a slight difference when it is enabled, as it takes about .10sec longer to go away.
Menu fading applies to most of the menus used in windows itself, such as the Start menu, menus inside Windows Explorer, etc...
the selection rectangle is the rectangle created when you select multiple files with your mouse, the difference isn't really noticable(not to me anyway) a combo box is a component with a drop-down arrow that you click to display a list of options.
Using a background image is just specifying an image to be tiled as the background of the folder. I don't really know any more simple way of explaining it than that. Common Tasks is a pane to the left side of the folder that shows things like My Computer, My Network Places, My Documents, etc(I may not be completely accurate on what is included, as I don't use that option and don't see the point in it)