When you turn on "Allow creation of records in this table via this relationship," you create a record in that table occurrence by setting fields in that table from the other side of the relationship. You can script this, or you can put fields from your related table on the "Input Form" layout. If you only want to allow the creation of one related record, you can just put the fields on the layout; but if you want to allow the creation of several, you can put a portal on the layout. The last row of the portal will allow users to enter data for a new related record. For a more advanced version of creating related records (and related techniques), learn about the Selector/Connector model.