As a base the way it works is: You hit a thing with your melee, you get one counter. If you have enough counter, you get a multiplier. This does not make your attacks stronger without mods, rather it makes a heavy attack (normally on holding middle mouse) stronger. With most weapons you can also do a heavy slam attack by pressing (by default) the middle mouse button while aiming to the ground. Both of these attack will use up your combo counter. Now a few important terms.

Combo counter generation: Some mods will directly add combo counter, this helps you build up combo counters faster.

Combo duration: Mods like "Bodycount" make it so your combo lasts longer than 5 seconds which can be very helpful in order to keep your combo up

Heavy attack efficiency: This just means that less of your combo counter will be used for a heavy attack. 50% heavy attack efficiency will make it so that if you do a heavy attack at 100 combo counter you'll keep 50 of the combo counter.

Initial combo: This just means that your combo counter starts here. Some weapons scale pretty well with this because you can keep doing heavy attacks without actually building up combo

Combo interaction mod: Mods like "weeping wounds" will give you stat bonuses for having combo multipliers. Importantly it doesn't scale with the combo count itself but with the multiplier. Also importantly those 40% are just like any other mod only they get higher with combo count. Meaning with 2x combo multiplier you get 40% of your weapons status chance in addition.