Alright. Short version:
WordPress is the blog. However, it is not the *content* of the blog. The content is actually stored in the mySQL database.
In order for it to find the content so it can then display it, it needs to know where the database is. So you need to give it the username and password, the database name, and the name or IP of the box where the database is running. All that is in the wp-config.php file.
This is not something you can guess at. If you have a database running somewhere, then these four bits of information are going to come from wherever you have that database running. If the database is on the same machine as the webserver, then the host will be “localhost”, because that means that it’s connecting to itself. If it’s on a different machine, you need to use the name or IP of that different machine instead.
The database name and username and password are all something you configure. The hostname is not.
The four bits of info have to be put in by you before you can do anything at all. Nothing works unless this information is correct.