Using node.js, express, and MySQL

I am currently in the process of creating an app and I am using node.js, express, and MySQL. I feel that I am in a bit of a rut in connecting my server to my database. Here's how I see things so far

server.js

var express = require('express');
var app = express();

//These are just my static finals so this can be ignored for now
app.use(express.static(__dirname + '/public'));
app.use(express.static(__dirname + '/public/views'));
app.use(express.static(__dirname + '/public/controlers'));

app.listen(3000);

console.log("Listening at 3000")

Here I am setting up a local server on my computer that is listening on port 3000. What I am hoping to do here eventually is handle post requests. My goal is to ensure that post requests are inserted into the database. So I realize that I need to do two things create a database and a schema for my database. For now I just want to create a simple table with an ID and first_name columns. I am using this driver https://github.com/felixge/node-mysql/.

So my next step is creating a connection

dbconnection.js

var mysql = require('mysql')
var app = require('../server.js');

var connection = mysql.createConnection({
    host        : 'localhost',
    port        :  3000,
    user        : 'username',
    password    : 'password',
    database    : 'liveDatabase'
});

connection.connect()
//queries and error handling go here
connection.end()

This is where I lose touch with my program.

Here's what I don't understand:

• I don't get how a connection is being created to my localhost:3000. I see the key values for host and post being assigned to localhost and 3000 and I am requiring my server in the db.js file (var app = require('../server.js');. Is this all that is needed to create a connection? How does it find localhost:3000? I am guessing this is all happening under the hood, but I feel a little stuck here.
• I have confusion about the database as well. Where should my database be created and live in order for .createConnection to be able to find it. Do I create a separate .sql file then just create my database and table(s) there and require(/database/path) in my dbconnection.js?

Any help is appreciated. Thanks!