Don't be sorry! There's so much to know about WDW, no one can know all the details.
The Candlelight Processional is a Christmas show at Epcot. Big production, with a choir and orchestra, and a celebrity telling the Christmas story.
Seating is open to all at no charge, but the performances fill up very quickly. If you want to reserve a seat, you need to do one of the dining packages. I believe you can do either lunch or dinner, at your choice of restaurant. So it doesn't have to be 'dinner and a show', but many people do the dining packages to guarantee that they'll get a seat.