innodb_log_file_size determines the size of the redo log. In short, this is a temporary storage zone on disk where data changes are buffered before being inserted in the actual table data files. It also stores temporary data that may be generated during the course of a transaction.
The first, most obvious advantage of this buffer is that it mitigates the problem of random writes, which is what would happen otherwise in a typical real-life situation. Writes in the redo log are done sequentially, which is quicker. Randomly located changes may be committed to the actual data tables at a later time, when, hopefully, the activity decreases.
The second advantage is it provides protection against data corruption in case of crash. Since a coherent version of the data (almost) always exists, either in the data table, or in the redo log, the risk of data corruption is lowered, since it should alwys be possible to restore the database to a coherent state. Other mechanisms exist on top of this one for the same purpose (eg. double-buffering)
As the manual puts it:
Sensible values range from 1MB to 1/N-th of the size of the buffer pool, where N is the number of log files in the group. (...) The larger the value, the less checkpoint flush activity is needed in the buffer pool, saving disk I/O. Larger log files also make crash recovery slower.
innodb_log_buffer_size defines the size of the memory buffer where data is stored before being flushed to the redo log.
The larger the better, but make sure to leave enough memory for other buffers. Also, I do not think there is a point in allocating more than the total redo log size (ie.
Books the size of a dictionary can be written about database tuning, this cannot be addressed here. This manual page is a good starting point. If you have identified a specific bottleneck, please come back with relevant information and I (we) will be happy to help you.