The destination is simply going to be where you would like it to place the files it will create for you.
You would want to check "Generate Service" if you would like a service facade created.
The Service name will be the name of your Service but note that you do not want to actually use the word service in the name as it will add it itself.
I would also suggest checking "ColdFusion 8 Compatible" for now.
So for example lets say I have a database table called "person".
And I use the service name of Person and check the option to generate the service.
I would get the following four files created in the folder I specified in destination.
Personally I like the older Flex 3 generator better. I also think it's generated code is much cleaner and easier to work with as it is passing pure objects around rather then values. But everyone has their preferences and I suppose the code as it is makes it easier for those not using Flex to work with.