"Disability" is defined as an impairment in earning capacity. Allen v. Brown, 7 Vet. App. 439 (1995). The veteran must prove that they have a current disability, diagnosis, or current disabling residuals from a disease or injury.
"Service-connected" means that the claimed disability was incurred or aggravated in line of duty in active military, naval, or air service. Ferenc v. Nicholson 20 Vet. App. 58, (2006). The veteran must show at least a 50% chance of incurrence, occurrence, or aggravation of a disease or injury during service. This may be established by medical or, in some circumstances, lay evidence. You must show a link between the claimed in-service disease or injury and the present disability.
Generally, the veteran must have been "discharged under conditions other than dishonorable." 38 U.S.C. § 101(2); 38 C.F.R. § 3.1(d). The military's discharge characterizations do not correspond to the VA's definition, therefore if you see a strange discharge description on your DD-214 you should consult your Veterans Benefits Manual (VBM).
The VA compensates service-connected diagnosis whether the diagnosis arises as a direct result of your military service or is secondarily related to your military service. For example, if you lost your leg while serving in Iraq, this would be a direct service-connected loss. If you became depressed as a result of your amputated leg, this would be a secondary service-connected diagnosis.
The VA has a schedule of ratings of reductions in earning capacity attributable to specific injuries or conditions. The ratings are based on the "average impairments of earning capacity resulting from such injuries in civil occupations." The schedule allows for 10 possible ratings ranging, by tens, from 0%-100%. If there is a question as to which rating the VA should assign to the disability, the veteran is entitled to the higher rating. See Caffrey v. Brown, 6 Vet. App. 377, 383 (1994). Sometimes you will receive a rating of 0% service connection. Although you will not receive any compensation for a 0% rating, you have cleared the service-connection hurdle and can appeal for a higher rating.