It's choosing which team will beat the other team once you factor in the points handicap we've set. It's really not all that different to backing yourself to win a running race even though you've given your brother a 10 metre head start.
Pick the team you think will win given the points handicap.
Your team doesn't necessarily need to claim victory in the contest, but in order for you to win they must have more points than the opposing team once the points handicap has been factored in.
Most people bet a minimum of $1 as that secures at least one unit of the advertised fixed odds. Eg: If you bet $5, you win the fixed odds (as advertised at time of bet) multiplied by five.