Luckily the forum comes with a resident Electrical Engineer.
Both honkin' red wires go to the terminal WITHOUT the copper braid attached.
One is from your alternator, the other is from the jump start terminal (and battery). The braid goes to the starter motor.
The smaller white wire goes to the smaller terminal. This is the terminal that energizes the solenoid (smaller cylinder) when the ignition send +12 V to it.
This does 2 things:
1) Pulls the starter motor gear into mesh with the teeth on the flywheel
2) Connects the 2 whopping terminals together, sending +12 V to the motor.
Everything is case grounded through the mounting.
Here's a schematic:
