Foreigner slot is for all foreigners. There were also talks about making all North American players be not classified as foreigners. So that would include Canada, Mexico, Puerto Rico and so forth) Not sure if this is the case yet. Will look into it though.
Basically:
- squad consists of 28 players
- salary cap of $2.2 million (so the salary of all players can not exceed this amount)
- granted up to 3 designated players (each team is given 1, but you are allowed to trade for another 2 making the total of 3. Some clubs will have 0 due to trading them away.) A Designated player is a player where his salary is NOT included in the salary cap. So for instance David Beckham's salary is somewhere in the line of $5-6 million, which would put them over the salary cap, but since he is classified as a designated player, his salary is excluded from the cap.
- only 8 of the 28 players on the squad can be a foreigner. So 20 players must be American. (however, you may now trade with other teams for extra foreigner slots.)
Trading/Transfer:
It's very different from the typical transfer period in Europe. Basically, the MLS doesn't buy or sell players among the clubs. They trade players. (my player XX for your player XX and player XX, or my player XX for your designated player spot). MLS clubs don't have the finances to buy players from Europe during the transfer period. However, the MLS does sell players to Europe. The money for players sold to Europe go to MLS.
Draft
The Draft, mainly an American sports thing due to the popularity of college sports. Every year before the season, MLS clubs have a player draft. College players enter this draft hoping to be selected by an MLS club.
Its not as confusing now. 
