In the machinekey tag the decryption method and decryption key is mentioned. This set automatically done while we setup a dnn site.
This is used for decrypting the user password. So this settings is required while we are moving a complete website or db to another location.
In dnn website the debug property is by default false. If you wants to debug your custom module then you can set it to true.
And remember if you are moving your whole development website to production server, you should revert back the debug property to false.