The box titled Mode , and showing Normal is a drop down menu of all the blend modes you can choose from. The Auto Erase check box, when selected, will draw the background color over the foreground color if you click and drag on a spot containing the foreground color. However, if you click on a color other than the foreground color, and drag, it will draw with the foreground color. Very confusing, if you ask me. The Opacity percentage determines how transparent the colors applied will be.
Lower values are transparent according to the percentage chosen.
You can type in a value, or set it by using the slider which appears if you click on the little arrow to the right of the percentage value. Size to Off, Stylus, or Fade. See the Brushes page for more details. If you have doodled with a tool's options and want to get back to the default settings, click that tool's icon at the far left end of its options bar. Choose either Reset Tool to reset only the current tool, or Reset All Tools to restore default settings to every tool.