Yes. 0.3.6-tiny is a stripped/limited version that does not have dhcpd enabled. The tiny version was made specifically for the people who have bad kernel partition so that it can fit in there... It's recommended to use 0.3.7 for everybody else.
The corresponding "G_OS<x>_<y>_FILE" is the path to the bootable kernel.
The G_OS<x>_PARTITION and G_OS<x>_NAME identifiers define the partition where the boot kernels are searched for. For example, Harmattan kernels are by default located on mmcblk0p2 in the /boot/ directory, which resolves to "/boot/Harmattan/boot/" in the script. When you are running Harmattan, this dame directory resolves to /boot/