Executive summary: Save your .wav in an archive, unchanged. For distribution, convert to 320kbps .mp3.
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Some explanations:
The best mp3 is 320 kbps=kilobits per second. That's about 2.3 MB per minute.
Mp3 compresses a file--makes it smaller--by throwing away information. A .wav file on a CD is 1411 kbps, kilobits per second. So the mp3 has discarded a lot of information, and the more it compresses, the lower the fidelity.
But given those absolute numbers, the quality of mp3 sound is actually quite good, because it is designed to discard the least crucial parts of the waveform first, the parts you rarely notice. And 320 kbps sounds fine to a lot of people.
Mp3 is called "lossy" compression, because you lose fidelity. There is also lossless compression--the FLAC format--which gives you files smaller than .wav files without losing fidelity. (How, given the numbers? Magic, as far as I am concerned.) Audiophiles like FLAC, and so do the online tapers' trading sites. However, FLAC files are larger than .mp3 files and an average listener may not have a player that plays them.
Processing means anything you want to do to the files--including, for instance, chopping a rehearsal recording into separate songs.
If you just want quick and dirty, you don't have to do anything. And for your archives, you don't want to do anything. You want to save the original, unprocessed recording. You only want to process a copy, not the original, because presumably the original is the highest fidelity. (Though of course simply editing a long recording into separate songs doesn't change the fidelity.)
But there are an infinity of things you can do in processing. Suppose you were running at a rehearsal, had a false start, and then plunged into the song. You can edit out the false start. Or suppose you record a live set, and there's applause in between songs, and you want to distribute one song. You could make the track fade in on the applause from the previous song and fade out on the applause at the end, for a smoother listening experience.
Soundforge has all kinds of effects available, most of which you hardly need for live recordings. Regardless, you never want to apply effects to your original or archive copy--only to a separate copy.