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Why do the defaults use more than one license?
They are similar licenses. The GFDL (GNU Free Document License) was created for software documentation and is the one used for the text of Wikipedia. The Creative Commons license (Cc-by-sa-2.5) is a newer license. As both are similar but subtly different, it is recommended you choose BOTH licenses, allowing others to decide which license to take into consideration for each situation. They both allow your image to be used for any purpose, including commercial purposes. However, others' work based on these images must retain the same license, and there are provisions for attributing the source of the image.
Author releases all rights: With either of these choices you do not burden others with having to give you credit, and your work can be used freely by anyone for any purpose, including commercial purposes. Whether you keep the copyright or donate to the public domain makes very little difference. There are legal arguments for keeping copyright, but many prefer to simply say they have made their work public domain. Although you've given up your rights to the image, Wikipedia will continue to acknowledge you as the creator of the image, and as with all images, you are encouraged to include details in the image description.
Who will be able to use my image? edit
For your work to be used on Wikipedia, it's not just Wikipedia you're giving it to. The freedom that makes the free encyclopedia work is the freedom for anyone to use and reuse the image for other purposes, including commercial purposes. While you may require credit or attribution, you can't demand notification of use, nor stop commercial use, unless you do not wish for your image to appear in Wikipedia.
Notes:
- ^ {{self|cc-by-sa-2.5}} is the only license listed which does not appear in the drop down list of licenses. You want to use it and can't find it, instead use the {{cc-by-sa-2.5}} and declare that you have created the image in the description.