What doctorpotford said, but just to elaborate a little more.
The dampers are the shock absorbers on the suspension. The compression and extension setting are how you control the shocks.
The easiest way to picture them, is think of a car driving over a speed bump. The chassis stays still but the suspension compresses as you go over that bump.
Compression is the upward stroke of the suspension, and extension is the downward stroke.
A low compression value allows the suspension to compress easier.
A high compression value makes the suspension harder to compress.
Too soft and you wont get brilliant cornering speed, too stiff and the car will 'bounce' over bumps and loose traction.
The extension is the force the shock applies pushing the suspension back down onto the ground.
A low extension value extends the suspension slower.
A high extension value extends the suspension faster.
Too slow and you will loose traction as the wheel isn't being pushed back onto the track, too fast and the wheel will bounce when it makes contact again.
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As for the diff, I must admit I'm not 100% sure about the initial torque, but the accel and deccel are quite simple.
Each drive wheel has a drive-shaft powering it. The two driveshafts on the same axle are connected via a diff. You might have heard of something called a diff-lock on trucks and 4wd's. A diff-lock is when the two driveshafts are locked together, meaning they both turn identically. This is handy for rough terrain because if 1 wheel begins to slip, the other wheel can drive you out. However, when you go around a corner, the outside wheel needs to rotate faster than the inside wheel as it has a further distance to travel so for racing you want a looser diff, one that allows them to rotate at different speeds. This is controlled by the LSD (Limited slip diff)
A lower number is a looser diff, and a higher number is a tighter diff. As an example, with a loose diff, if a wheel looses contact with the road, the majority of drive will be sent to the airborne wheel (no load - easier to rotate). With a stiff diff, even if a wheel breaks contact, drive will still be sent to the grounded wheel.
So for acceleration, if one wheel looses traction and starts spinning, with a loose diff you will loose drive (acceleration), and with a tight diff you won't loose the drive. But, if you try and accelerate while turning, a tight diff will cause understeer (it tries to go in a straight line) and a loose diff often causes oversteer (rear end tries to overtake the front)
So you need to find a balance between maintaining the best traction whilst still allowing the car to rotate sufficiently.
The deceleration part is pretty much the same principle. If you try to brake and turn, a tight diff would cause understeer and a loose diff would cause oversteer.
I personally set initial torque to 10 for pretty much every car, occasionally I will tweak it. But for acceleration, the better the cars natural traction, the lower you can set the value. If you are constantly spinning the wheels on traction, turn it up abit higher. For deceleration, if its difficult to turn and brake lower the value. If the rear end starts to wobble, turn it up.
It's a fine balancing act, and you will have to experiment to see what works best for you. Hope that's helped you understand it.