They're the same username and password you use when you check your E-Mail. You do have to enter some sort of address, though, or else you will not be allowed access. If this happens, wait awhile and try again. The window under local shows you the directories on your own computer. The window under remote shows the directories on the computer to which you are connected.
Directories are the way in which people organize stored data on computers.
Each program on your hard drive has a separate directory, and each directory is usually further divided into subdirectories, which themselves can be divided into subdirectories, and so on. You can tell directories in the listing by the fact that they have brackets around their name. For example, let's say you are connected to a host and are looking for image files with pictures of Dalmatians. The way in which you got to it was by navigating the host computer's directory tree. By navigating through these directories, you can select the directory to which files downloaded from the remote computer will be sent, or from which files uploaded by your computer will come from.