Hello Siva,
Parameters and List of Values are useful when you want to restrict the data in your report based on end user selection.
Parameters are cretaed using @Prompt() function where you can associate a dimension that is required to restrict the data you can use List of Values in it as well so that end user can have values available in more precise manner.
and LOV can be static, hierarchical or Custom SQL based. you need to have Keys defined in your LOV so that when end user refresh the LOV during selection it retrives the values fast.
Regarding the impact on Webi report its just that if you have a parameter or LOV in your Webi report your data will be restricted based on the selection.
Regards
Niraj