Hey Dude,
Don’t feel stupid, no one is born knowing how to set up a guitar !

OK Action:
This is the height of the strings off the fret board.
First get a cappo and put it on the guitar over the first fret. You lower the height of the strings in several ways.

1) By shaving the nut, this is a difficult job and I’d leave it to a professional

2) By adjusting the bridge. On a Strat there are two alan wrench (nut) type screws that rise and lower the action on the bit of metal that holds the string in place (the saddle) mounted on the bridge. You want to lower the string (whilst the guitar is tuned to pitch) until the string buzzes (is touching a fret) when you pluck it normally. Then raise the string until the buzzing stops.

It is possible to get a lower action on a guitar with a bit of relief (or curve) in the neck and this involves playing with the truss rod. I’d leave this one alone until you are a bit more familiar with the guitars setup.

Intonation is the harmonic thing you were asking about. This keeps all the notes in the right place and is also adjusted at the bridge. The screw that moves the saddle back and forward alters this. This alters the scale length and will make the harmonic over the 12 fret move. The pitch of the harmonic wants to be the same as the note you fret (at the 12 fret) and also directly above the 12th fret.

Best of luck
S