PHP Code: 
category_name=&posts_per_page='.get_option('posts_per_page') 
category_name is empty so that means it will grab from all categories
posts_per_page = shows number of posts to show in each page

While
PHP Code: 
cat=-7&paged=' . $paged 
cat = categories seperated by id's to grab news of. Since you are using "-", it will show all other posts except from that category (7)
paged = display the posts that would appear on x page!