Hi,

Yes some minor confusion.

Flow control is not used by the Arduino in any situation.

HardwareSerial is the most common generic term for the built in Arduino Serial ports. Depending on your Arduino you will have 1,2,3 or 4+ Serial ports available to your code Serial.print(), Serial1.print(), Serial2.print() etc.

So HardwareSerial can handle high speeds because it is a part of the mcu. HardwareSerial is also the name of the class that the Arduino core uses to provide the Serial,Serial1 etc object. 

Actually more recent Arduino boards have started to use different classes for the various types of built-in ports such as UART, USART, USB etc. However this is unimportant and Visual Micro automatically uses the correct classes for debug based upon the selected board. This is why HardwareSerial is a generic term.

If you do not have available built-in Serial ports then we can BitBang rx/tx using a couple of spare digital pins reliably at speeds up to 56k. Arduino comes with a library called SoftwareSerial which allows the two digital pins and preferred speed to be specified in the code which then provides a custom serial object that can be used to .print() and .read(). It's not quite as good as HardwareSerial but it's okay and only requires the tx pin for non-breaking trace debug. 

If you select the SoftwareSerial option then Visual Micro will automatically include the Arduino softwareSerial library in the temporary (hidden) copy of the sketch (as happens with all debug commands) during compile. 

If you select HardwareSerial then you can use the RemotePort to determine which Serial object (or custom) Visual Micro will use for debug, or leave empty for the default of Serial. 

You also do not need to specify HardwareSerial, the RemoteTransport will default to HardwareSerial if it is not set. 

The speed will default to 115k. With SoftwareSerial it is best to set the speed to 56k or less.

The documentation is still being enhanced but there is some info between these pages

http://www.visualmicro.com/page/User-Guide.aspx?doc=Advanced-Serial.html
http://www.visualmicro.com/page/User-Guide.aspx?doc=Project-Properties-Reference...
http://www.visualmicro.com/post/2013/04/26/How-to-debug-Arduino-on-a-different-u...
http://www.visualmicro.com/post/2012/05/06/Configure-debug-for-other-types-of-se...

Hope this makes sense