There are some good guides around, which i'm sure someone will link to, but here are a few quick pointers:
- Lighter oil has less resistence, and so makes the car more responsive.
- Keep lighter oil with softer springs and vice versa, to ensure good balance of car handling.
- smaller piston holes have more "pack" which means the shocks will "load up" when the piston moves fast and pushes oil through. This stops shock bottoming out e.g. on big jumps.
- More piston holes means more oil flow, means less resistence, see first point.

This is very very general, and depends on car type, track type, set-up etc.