Both live in the Delivery card:

• Offer Free Delivery? — when the coupon is in the cart, the delivery fee is waived for the ordering systems ticked under Allow on.
• Discount Applied to Delivery Fee? — the coupon's discount is also applied to the delivery fee (again only for the ticked ordering systems), instead of just the items.

They can be used alone (e.g. a "free shipping" coupon with a Value of 0) or together with a normal discount. When several coupons are in the cart, the free-delivery / delivery-discount decision is taken from the first coupon in the cart.