The blue circle is Kerbin itself, the light blue circle around it is the top of the atmosphere. You can click+drag on the left of Kerbin to set periapsis, or on the right of Kerbin for apoapsis. You can also use the text boxes to enter altitudes and velocities numerically.

You need to specify two values in all: either altitudes of periapsis and apoapsis, velocities at periapsis and apoapsis, or both altitude and velocity at either periapsis or apoapsis. You select the values you want to enter with the Parameters menu, the remainder of the information will be computed from the values you put in. If you enter altitude and a velocity above escape velocity, it'll give you excess velocity at infinity. The apoapsis and periapsis textboxes are altitudes above mean sea level (AMSL), the text report below has both altitudes AMSL and distances from the center of Kerbin. Note that if you specify values that lead to an apoapsis lower than periapsis, the plotted orbit and contents of the text fields will be swapped automatically.