As the name implies this is where you can set the preferences for your computer. The preferences are organized into five categories: Person, Hardware, Internet & Network, System, and Other (note: other does not always appear).
The names give you a good idea of what most of the preferences do, but a few of the more important options are explained below.
The options in appearance include the button, and scroll bar color, the object highlighting color (what color the background is when you highlight text), scroll bar options, history length, and font smoothing options.
Dashboard is a new feature of version 10.4 and Expose was introduced in version 10.3 of the operating system. The Dashboard moves little applications, called widgets, onto your screen. The Dashboard applications should be items you use often, but don't want to take up space all the time. Expose allows you to arrange any open windows and easily access them. In this preference pane you can setup hot keys and hot corners to activate the Dashboard and Expose.
The international preference pane is where you set the main language on your computer, the format of numbers, such as time and currency, and change the keyboard input settings. In the keyboard input settings you can select different keyboard layouts, or set the keyboard for inputting different languages.
A feature introduced in version 10.3 is the file vault. The file vault allows you to encrypt a folder (your home directory) on your computer, so only someone with your password can view or change the files inside. In the security preferences you can turn on the file vault as well as adjust other security preferences.
This is where you can set all of your network preferences. You should never alter anything in this Preference Pane, unless you either know enough about your network structure, or you have been given information from your Network Administrator on which values to change. You can, however, alter either the method in which you connect to the network (Ethernet, Airport, etc.) or you can change your location. You would only have two different locations if you connected to two different networks on a regular basis (at home/school/work, LAN/WAN, etc.). The University of Washington Internet Connectivity Kit (UWICK) has information on how to set your preferences to dial in to the UW network from home.
The sharing preferences pane is used to setup file sharing over a network. Selecting Personal File Sharing and Windows Sharing will allow other users in your network to access the Public folder for your account.
Software update is used to get the latest updates for apple software on your computer. This includes security updates, updates to the operating system, as well as less critical updates. These less critical updates may include updates to Quicktime and the iLife suite of software.
In this preference pane you can change which disk is used to boot your system. This allows you to boot from a CD (if you need to install a new operating system for example). You can also boot from CD by holing down the 'c' key when the computer is starting up.
The universal access preferences pane contains controls for people with disabilities. The preferences are organized into categories based on what you have difficulty with (seeing, hearing, keyboard, and mouse).