Unless you get a channel wad for USB Loader [not a foreworder wad] you can install it right to the system menu and then you will no longer have to use the SD card. But be aware that without an SD card, you will not be able to download any cover art for the games.
From Admiral Victorinox's Glossary of terms, hope he doesn't mind,
.Elf: old program format for the homebrew channel, its only supported on beta 8 or lower.
.Dol: current program format for the homebrew channel, its supported on all newer, and should work on all older Homebrew channels.
.Wad: more or less the exe of the wii, they are just installer, there are currently 3 types, IOS, Virtual console, and wiiware, they can brick your wii but its very rare.