Simple Moving Average
is just the average of the Close Price over the specified Period. This helps to smooth out the effect of any price spikes. A SMA with a short Period will be more volatile than one with a long Period.
Sum all the Close Prices in the Period, then divide the total by the Period.
Average Other Values
Although the default input is Close Price, you can vary this to any other item. For example, you could specify Volume as the Custom Input to create Average Volume.