In your admin panel you have an option to generate an HTML version of your site. This is generally not useful -- since it's HTML it's not dynamic, it can't use any dynamic features such as being aware of which member is logged in. Every visitor will see the same page. Please note that if you're looking into HTML generation for the sake of reducing server load you should use the cache system instead, and if you're looking into it for SEO considerations you should use URL rewriting instead.

Only selected important pages get HTML versions generated: your main index, category pages, article details and threads. You can set what you want these pages named on your generate html page. You also need to select that path you want them written to. You may want it generated in some special place so that you can create a downloadable ZIP of it or the like.

Since the static versions are much more limited than the dynamic you have the option to use custom templates for them suited to your purpose. Type those on the page.

The "Use subdirectories" option will make each category be a subdirectory.

The "Distribute load" option generates as people browse the site, but it's better to use the htmlcron.php cronjob. Set a cron wget [your url]/htmlcron.php to run every 5 minutes (or less often for small sites) to automatically regenerate everything safely on a regular basis. Of course this requires you have permission to run crons on your server.