Parameters allow you to prompt users for one or more inputs that will be passed into a build. For example, you might have a project that runs tests on demand by allowing users to upload a zip file with binaries to be tested. This could be done by adding a File Parameter here.
Or you might have a project that releases some software, and you want users to enter release notes that will be uploaded along with the software. This could be done by adding a Multi-line String Parameter here.
Each parameter has a Name and some sort of Value, depending on the parameter type. These name-value pairs will be exported as environment variables when the build starts, allowing subsequent parts of the build configuration (such as build steps) to access those values, e.g. by using the ${PARAMETER_NAME} syntax (or %PARAMETER_NAME% on Windows).
This also implies that each parameter defined here should have a unique Name.