Japo sez

[sdl]
fullscreen

If set to "true", DOSBox starts in fullscreen by default; if set to "false", windowed. Duh. (There are many other options whose possible values are "true" or "false", it's like on/off.)
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[sdl]
fullresolution

The resolution which DOSBox will try to set your screen to when working fullscreen. Its values can be "original"--the game's own resolution--or any particular setting like for example "800x600", "640x480", etcetera.

You must take into account that modern graphic hardware won't likely support every old resolution from DOS days, so if we leave "original" as default and try to play fullscreen, DOSBox may try to use a resolution either the card or the screen don't support, they won't be able to comply and will choose another resolution, and we may end up with a small game image surrounded by a big black frame.

DOS games usually had 320x200 or 640x400 or 640x480 pixels resolutions. I recommend changing the default value to "640x480", because it's the one of the three that's likely to be supported by modern graphic hardware: the games whose original resolution is 640x480 will display perfectly, the 640x400 ones will fill the whole width and two black strips will appear at the top and bottom, like a Cinemascope movie on TV. Besides (if we leave the "scaler" option as default), the image from games whose original resolution is 320x200 will be enlarged into 640x400, and it will be displayed just as well filling the whole width, without losing a bit of definition.
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[sdl]
windowresolution

The size of the window that DOSBox will be running in when not in fullscreen. It can also be set to "original" or a fixed resolution, and if it's larger than the game's original one we can make DOSBox scale the image bigger--because 320x200 pixels look very very small in modern resolutions.
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[sdl]
sensitivity

The higher this value, the faster the mouse pointer will move inside DOSBox, and the lower the slower. Thus we can adjust the exact desired speed for each game.
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[dosbox]
captures

Folder where our screenshots and clips will be stored when captured.
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[dosbox]
memsize

Size of RAM memory emulated. The default size is 16 MB which is more than enough for most DOS games. You're not recommended to change this unless necessary because many old games may crash if they find more than 16 MB.
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[render]
frameskip

If our processor isn't fast enough for a game, and we tried everything else (the options in [cpu] above all), we can set this higher than "0" to relieve it of some work and get hopefully better performance but with choppier animations. (The value is the number of frames that DOSBox skips before drawing the next one: if it's "1" only half of the frames will be drawn, if "2" a third, if "3" a quarter, etcetera.)
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[render]
aspect

Enable ("true") or disable ("false") aspect correction. So if we enable it, the image will fit our screen whatever the resolutions of the game and screen are. Sounds good at first, but I recommend to leave it disabled (if your graphic card supports at least 640x480 as explained under "fullresolution") as default for two reasons: first and foremost, image definition is lost in the process; and second, aspect correction can be a costly process and may impact performance.
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[cpu]
core

Mode of virtual processor emulation. The "dynamic" mode has the advantage of making the most out of our computer's power, so we can reach around twice as high cycle counts as in other modes. We'll have to use this dynamic mode for the latest DOS games that need a powerful processor.

The disadvantage is that some games may crash in this mode, but work fine in "normal" CPU mode; the good news is that most of these are old and don't need high cycles anyway.

We can leave it as default in "auto", that makes DOSBox use the normal mode for old real-mode games and the dynamic one for protected-mode games, that usually need much higher cycles. (Don't worry if you don't know what the real and protected modes of x86 processors are--neither do I.)
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[cpu]
cycles

Very important, this value's the speed of the virtual processor emulated by DOSBox for our DOS programs. As we said it's related to "core", since our computer will be able to emulate higher cycles in "core=dynamic" than in "core=normal". Increasing the cycles above this limit, which for each mode depends on the power of our real processor, won't achieve anything good.

This option can be set to a numerical value, or "auto". The "auto" setting tells DOSBox to use 3000 cycles for old real mode games, and to emulate the fastest processor possible for protected mode games.

(Maybe you find it strange that a DOS game that worked fine in an old 486 CPU now may run too slow with DOSBox in a much more powerful machine; but it's easy to understand if you consider that DOSBox's compatibility's so good because it emulates hardware--that is hardwired electronic circuits--through software--a program.)
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[cpu]
cycleup

Amount that cycles go up every time Ctrl+F12 is pressed while DOSBox is running. A value below 100 is understood as a percentage of the previous cycle count; a good setting is 10 or 20 (per cent).
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[cpu]
cycledown

Amount that cycles go down every time Ctrl+F11 is pressed while DOSBox is running. The same about values below 100 applies here.
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[sblaster]

Under this heading, the settings for the virtual Sound Blaster sound card are found. It's best not to change them but leave as default, and remember the values when the games or their setup programs ask about them, as the basic tutorial explains: Sound Blaster 16 card, port/address 220, IRQ 7, and DMA 1.
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[dos]
ems

Enable ("true") or disable ("false") expanded memory (something used formerly in x86 processor's real mode). Some games need it, whereas other few won't work if this option is enabled; so we can leave it enabled as default and disable it for the necessary games.
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[dos]
keyboardlayout

Keyboard layout, duh. This setting's a feature of the latest DOSBox versions, the old ones had the USA keyboard only. We can change the default value to the national code we prefer, for example "sp" for Spanish keyboard layout. This makes typing easier for non-americans, but be warned that some games (I'm thinking of X-Wing for example) are designed to be played with an american keyboard, and if we change the layout we'll find the controlling keys (which can't often be customized) out of reach--and so to play these games it's better to leave the "us" option even if that's not our usual preference.
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[autoexec]

Under this heading there are no specific options, but every line put here will be run as a command when starting DOSBox. It's the place to insert instructions for virtual drive mounting, among other things.