In most DAW software, those are automatically setup to reflect what your audio hardware's driver reports it is capable of. In your case, it sounds like your interface (or sound card if you don't have an external interface) has two input channels, and you can either use them as individual mono busses (Mono1 and Mono2), or record them together as a single, stereo track via the Stereo 1 input bus.
A lot of times the terminology can be mixed up, redundant, interchangeable and kinda confusing because of that, but it might help to think of it all like this: You route (really "arrange" is a better word) physical channels (like the actual holes you plug things into) into input busses, and then in the tracks in your software, you choose from those busses which signals you want to record into that track. Exactly what this looks like in each software is a little different, and some let you get more creative with the kinds of input busses you can set up than others do, but they all more or less have to work that way.