Newbie questions are the best kind! They mean someone's getting into this stuff for the first time ;)
The vents allow for proper air circulation through the smoker. Through the chimney effect, cool air is sucked in through the bottom vents, heated up by the burner, rises through the smoke chamber, and exits through the top vent carrying the smoke with it. So having proper circulation is important to ensure good heat and smoke distribution. It also allows humidity to escape the smoker. If it is too humid inside the smoke chamber, it can condense and turn to a foul tasting creosote like stuff. You don't want that.
As for what the proper settings are, i recommend trial and error. On my Broil King Smoke, the bottom vents are not adjustable, so they are always wide open and I only control over the top ones ( I have 2 top vents). I have found that I can use the top vents to fine tune the temperature of the cooking chamber. The more I close them, the less air circulation, so the cooler the smoking chamber. But I'm only familiar with my rig so YMMV
Hope that helps