Speed is how far you have to move the mouse to move the pointer a particular distance. A high speed means that very small movements will shoot the cursor a large distance.
Acceleration is a very clever optimization. Normally, to keep precision control over the cursor (for those who need it) you need to keep the speed pretty low. But this means that if you need to get to the other side of the screen, you need to slide the mouse annoyingly far. Acceleration lets you have the best of both worlds.
What acceleration does is boost the speed temporarily when you 'flick' the mouse. So if you need to get to the other side of the screen, you can flick the mouse quickly just a short distance and the cursor will move much further. You then switch to moving more slowly to get the cursor exactly where you want it.
Most people can figure this out really quickly without even needing to be told what's happening. Just set them both to the middle, and then do this:
1) If you feel like you can't make precise motions over short distances, turn the speed down.
2) If you find that moving large distances is tedious, turn the acceleration up.
3) If small movements seem to take too much work, turn the speed up.
4) If you overshoot or have to work too hard to be accurate on large movements, turn the acceleration down.
You can see this in action by the way. If you make a U with your thumb and forefinger about two inches apart and put both fingers against the table, confining the mouse, you can see that the mouse moves between two points on your screen as you slide it back and forth against each finger. Then if you flick it quickly, you'll see it jumps outside the two points even though it doesn't pass either finger.