With hosted blogs, just click the Hosted Provider option, and choose an option from the list.
If you have a blog installed on your Web site, click My own server/custom. Then, select an option from the API list. Your choices are:
Wondering what an API is? It's just a way for two or more pieces of software to talk to each other -- in this case, through a file called xmlprc.php that's on your server. For most blogs, you can select MetaWeblog API. If that doesn't work, try selecting Movable Type API.
In the URL field, point Google Docs to the file xmlrpc.php -- for example, http://www.mysite.com/weblog/xmlrpc.php.