You chose a weapon, gold sword, diamond sword or bow, each has it's own special ability. Then you can upgrade different features depending on weapon type, such as how often you can use the ability, damage, knockback, sharpness, etc. I believe you right click to add them to your weapon (if right click doesn't work, left click) each upgrade costs money. You only get one (unless you destroy it and start over) so choose wisely.
You need VIP to use the forge. VIP is available in the webshop.