Arrow: This is the basic tool to have enabled so you can select and move clips.
Edit Tool: You can use this to add clips to your project. Select a portion of a clip from an Event and then click the Edit tool to add it to the end of your project. (You can also drag clips to exactly where you want it in your project using the Arrow tool.
Favorite Tool: Use this to mark a select clip as a "Favorite" which then will be indicated by a green line under your clip in the Events Browser. It's good practice to watch through all of your raw clips and mark all of your good shots so you don't forget to use them. You can then select View Menu > Favorites or View Menu > Favorites and Unmarked to filter your raw clips.
Unmark Tool: Use this to remove the Favorite or Rejected indicator from a clip.
Reject Tool: Use this to mark a select clip as a "Reject" which then will be indicated by a red line under your clip in the Events Browser. It's good practice to watch through all of your raw clips and mark all of your bad shots so you don't accidentally use them. You can then select View Menu > Favorites or View Menu > Favorites and Unmarked to only show the raw clips that are usable.
Keyword Tool: You can add keywords to clips so that you can keep track of what's in the clip. Clips with keywords associated with them have a blue line above them in the Events Browser. For example, you may want to mark all of the clips that have a dog in them, and a separate keyword for every clip that has a car in it. Then you can easily search using Window Menu > Show Keyword Filter to show only clips of "dog" or "car."
Record a Voiceover: This opens up a control panel for you to record a narration audio track.
Crop, Rotate, and Ken Burns: This tool opens up in the main viewing canvas so you can choose how to size a clip in relation to the rest of the project. If you select the Ken Burns option, you will see a green Start rectangle and a red End rectangle to indicate how the video will zoom during the duration of the clip. This can be a useful way to create a sense of motion even if your video was shot on a tripod and you did not adjust any camera settings during the original recording. Click each rectangle's outline to define its size.
Inspector: This opens up the Inspector panel which enables you to control many powerful options for clip, including video effects (black and white, dreamy look, etc), audio effects (robotic, echo, radio static), speed (slo-mo, timelapse), stabilization, brightness and color correction, and audio volume and fades.
Here is the audio section of the iMovie toolbar