The database is the file in Miranda that stores all your settings, contact list, and history.
It is much like the Windows registry, although it is contained in a single, easily portable, and easy to back up, file.
Your database may grow over time, as information is added, and deleted, deleted information is not always thoroughly removed.
You should always back up your database before running DBTool!
Make sure Miranda is not running, or your database file will not display in DBTool.