Discrete buttons are separate buttons for ON and OFF such that pressing ON always turns the unit on (if it's already on it does nothing) and the same for OFF.

Toggles are one button that toggles the power on and off.

The harmony is just trying to compare the actual remote's commands with the database so that it chooses the right commands for your unit. You can skip that step if you think the database is correct for that model by telling it you don't have the OEM remote.