At its simplest, the app.config is an XML file with many predefined configuration sections available and support for custom configuration sections. A "configuration section" is a snippet of XML with a schema meant to store some type of information.
Settings can be configured using built-in configuration sections such as connectionStrings or appSettings. You can add your own custom configuration sections; this is an advanced topic, but very powerful for building strongly-typed configuration files.
Web applications typically have a web.config, while Windows GUI/service applications have an app.config file.
Application-level config files inherit settings from global configuration files, e.g. the machine.config.
Reading from the App.Config
Connection strings have a predefined schema that you can use. Note that this small snippet is actually a valid app.config (or web.config) file:
<?xml version="1.0"?>
<configuration>
<connectionStrings>
<add name="MyKey"
connectionString="Data Source=localhost;Initial Catalog=ABC;"
providerName="System.Data.SqlClient"/>
</connectionStrings>
</configuration>
Once you have defined your app.config, you can read it in code using the ConfigurationManager class. Don't be intimidated by the verbose MSDN examples; it's actually quite simple.
string connectionString = ConfigurationManager.ConnectionStrings["MyKey"].ConnectionString;
Writing to the App.Config
Frequently changing the *.config files is usually not a good idea, but it sounds like you only want to perform one-time setup.
See: Change connection string & reload app.config at run time which describes how to update the connectionStrings section of the *.config file at runtime.
Note that ideally you would perform such configuration changes from a simple installer.
Location of the App.Config at Runtime
Q: Suppose I manually change some <value> in app.config, save it and then close it. Now when I go to my bin folder and launch the .exe file from here, why doesn't it reflect the applied changes?
A: When you compile an application, its app.config is copied to the bin directory1 with a name that matches your exe. For example, if your exe was named "test.exe", there should be a "text.exe.config" in your bin directory. You can change the configuration without a recompile, but you will need to edit the config file that was created at compile time, not the original app.config.
1: Note that web.config files are not moved, but instead stay in the same location at compile and deployment time. One exception to this is when a web.config is transformed.
.NET Core
New configuration options were introduced with .NET Core. The way that *.config files works does not appear to have changed, but developers are free to choose new, more flexible configuration paradigms.
