The simplest connection scenario is when the database you want to connect to resides on your own machine.
Is the database already running on a server? If so, you can specify fewer parameters in the Connect dialog. If not, you need to identify the database file so that Sybase Central or Interactive SQL can start it for you.
Are there multiple databases running on your machine? If so, you need to identify the database to which you want Sybase Central or Interactive SQL to connect. If there is only one database, Sybase Central or Interactive SQL assumes that you want to connect to that one, and you don't need to specify it in the Connect dialog.