Can somebody explain to me how MySQL Foreign Key and References work and what do they do? Trying to look it up, but have not found any good documentation that explains how it works and the benifits from it.

In MySql only InnoDB tables support Foreign Key and Reference. So if you don't use InnoDB (the default is MyISAM) it's of absolutely no use at all.

FKs and references are about relationships between tables and to maintain referential integrity when deleting records.
Normally a FK would be the PK (Primary Key) of the table you are creating a relation with

FOREIGN KEY (column_in_table) REFERENCES parent_table(parent_field)