Retention asks whether people come back.
How it works
Take everyone who did something in a period, then measure how many did something again in each later period.
Reading it
The shape matters more than any one number. Retention that falls and then flattens means you have a real core of users; retention that keeps falling means you do not, however good the first-week number looks.
Choosing the actions
The return action defines what you are measuring. "Opened the app" flatters; "did the thing the product is for" is the honest one.