The Database contains all the information about the World. It contains everything from the Server Variables to Spawn Groups, NPC information, Loot Tables, everything. Except Spells. As for which to use, you can only use one at a time. PEQ or ProjetEQ (you can read more about them at
http://projecteq.net) have been working on creating a completely live like experience and have the world populated up to Luclin. Cavedudes database is populated up to parts of OoW and GoD. I would suggest you set up both of them and try them both out. See which one you like best.