Could someone explain how what project type you choose affects how Premiere Pro works.
For example if I've converted my HDV footage to an intermediate codec what type of project should I create? I'm guessing not HDV or any of the other file format specific ones.

What is 'desktop' editing mode? You mainly see it in the web presets.

If my final output is a say a progressive wide screen NTSC DVD what should I use? Maybe the DV presets?

The render presets for a project, does it matter what they are set to?

Anyone who could explain the underlying ideas behind project presets would be appreciated.

The project settings tell Premiere what is the format of your project, of all the sequences that you create. This means basically the video resolution and audio settings at which you will be working. In addition they define what compression you use for the rendering. For example, you could have HDV clips and internally render to Uncompressed. Or you could set the rendering to a low-quality setting like JPEG 40% to make a quick preview leaving the time consuming phase for later when you have finalized all the cuts.

The project settings takes care of it. Since you can mix together different types of media, video clips, photos, photoshop files etc. Premiere uses the presets to know what will be the resolution that you will be using in the project.