A repository channel is a list of repositories. Repositories contain one or more packages. By default Package Control ships with a default channel, http://sublime.wbond.net/repositories.json
Unless you are planning on maintaining an ecosystem of repositories separate from the default one, you probably just want to Add Repository. I'll be sure in the next release to just call it a Channel, not a Repository Channel. I should also add some more user-focused docs about the difference.
Package Control uses http to download packages from GitHub, BitBucket and other sources. You will get a similar effect by doing a git checkout, it is just that Package Control automatically keeps your packages up-to-date automatically and offers some things like messaging and usage stats (http://wbond.net/sublime_packages/community
) to package developers.
If you want to add a GitHub repo to Sublime that is not included in the default channel, you want to use the Add Repository command and paste in an https://github.com/user/repo