The Random Background button will choose one of these and display it in the current mode. For speed and convenience the thumbnails are grouped by the directory they live in or as a group of all individual files. How long is up to you. You can set it to pick random backgrounds or go through the list of backgrounds in the order you entered them, first all of the directories then all of the files. All Scaling is max aspect and larger images are always scaled down to the size of your desktop.
Scaled images are always centered.
The way gBackGround guesses what type of file it is reading. You can set it to use the contents of the file to try and guess the MIME type of the file or use a psuedo MIME that looks just at the filename. The way that gBackGround starts up. And, of course, what files and directories you want gBackGround to look for with an easy to use dialog accessible both from the properties dialog and from the Choose background window. This dialog has separate lists for the directories and files you have included and will let you preview files before adding them or removing them.