mono means one channel.
stereo means two channels (left and right).
which you choose depends on what you are recording.
you can make a two channel recording of a mono source signal (such as from a single microphone or a guitar input) such that both recorded channels are identical. since stereo format files are the most common, you might want to choose that. but of course if you're recording a mono source signal, then your 2 channel recording will be twice as big. so if you need to save space, record to a single channel file -- you can always convert it a 2 channel mono recording.
when you buy a CD of your favorite artist, it is a 2 channel "stereo" recording. however, most things were probably recorded with a single microphone and mixed to the two channels. sometimes a pair of microphones might be used to record ambience in which case that is a true stereo source.
not knowing such basics, you're definitely not going to get the most out of protools.
