About This File
id's BSP builder takes a DWD file as input, and generates a WAD file. A DWD file is bascially an "ASCII WAD" file; it is a text file describing the linedefs, sidedef, sectors, and things on a level. The BSP builder creates the remaining resources.
Note that IDBSP automatically builds the REJECT resource, to help speed up all those line-of-sight calculations.