VA C&P exams is where you will get examined in person and the VA examiner will report on your condition and limitations, such as your range of motion (ROM) and any episodes of being bedridden, etc... The C&P reports will play a key part in how the VA rates you later on. Hopefully they will be accurate, but if not, there's things you can do to effectively counter by showing other medical evidence that shows your conditions to be worse than shown on the C&P's. A DBQ (Disability Benefits Questionarie) roughly the same questions as the C&P, but performed by an outside doctor of your choice is probably the best counter to a falsely minimizing C&P exam.
NARSUM, Narrative Summary, is an interview with a military physician. It will play a key part in the MEB's decision as to what they consider are limitations and conditions that would NOT meet retention standards. It's important that you explain your conditions and limitations fully. They are looking at IF you can perform you MOS at the position and rank you hold, so if you're an Infantry Staff Sergeant, your inability to perform such activities what they should be comparing your limitations to.
At the MEB stage, they will give you a list of all your stated conditions, and a decision on which they consider do not meet retention standards. You will have 10 days to review, talk to JAG attorney (free of charge) or a lawyer of your choice (at your expense) and file an appeal to the MEB if needed. It's key at this step to have ALL the conditions that prevent you from doing your military job listed as NOT meeting retention standards. This can get technically complicated, there are conditions that are ratable but might not be on the MEB findings, in my case getting bilateral (both legs) radiculopathy added by appeal was crucial to success later on during the PEB stage. This is where researching all your conditions and the medical basis for what is and isn't meeting retention standards is key. Do your homework, look them up in AR 40-501.
http://www.apd.army.mil/pdffiles/r40_501.pdf
After MEB the VA will decide based on your medical records, the C&P exams, and the NARSUM what each condition warrants for a rating based on the severity. This usually takes several months for the VA to process, it's the quiet before the final storm.
When the PEB gets the VA's ratings back they decide which conditions are "Unfitting", they base this mostly on what the MEB has found as Not meeting retention standards, hence the reason why getting the MEB findings right is crucial. Then the PEB will send you their findings along with the VA's ratings. Again you'll have 10 days to review and appeal if needed.
If your VA ratings are lower than they should be, at the PEB stage you can file a VARR (Veterans Administration Ratings Reconsideration), which the JAG lawyer will help you with. A great weapon to show your actual limitations and conditions is a DBQ for that particular area of injury, as explained above. When two sources of reliable evidence (C&P and DBQ) that disagree for a ratable condition, the VA is supposed to default to the higher rating.
The Military Severance is a shining carrot on a stick to those like the idea of a big lump sum check, but keep in mind that's a one time deal and the VA will get every penny of it back over time if you can't prove it's combat related. Worse you'll be out of the military with NO Tricare coverage (in the long run worth more than any severance check), and as far as the Army's concerned you're not their problem anymore and you have NO retiree benefits such as base privileges, life insurance, SBP (Survivor Benefit Plan) which allows your wife to draw up to 55% of your military retirement check AFTER you die for the rest of her life. That said in most every case getting to 30% or higher on the Army PEB finding and being Medically Retired is a much better deal for financial security and healthcare coverage.
No matter what rating the Army gives you, the VA ratings (for all your ratable conditions) is separate and paid from the VA not the Army. Lump sum you pay back to the VA over time, and the Army retirement money you have to waive to draw the full VA amount, IF you don't qualify for either CRSC or CRDP.
CRSC and CRDP are the two ways you can draw BOTH the VA disability and Army Retirement benefits, basically CRSC applies to Combat Related injuries (including getting injured by military specific gear, or during field training for combat), and CRDP applies to those who have at least a 50% rating AND have 20 good years of service. I believe TERA after 15 years also counts if you can swing it, but double check.
http://www.dfas.mil/dfas/retiredmilitary/disability/comparison.html
Lastly the hardest part of the IDES process is you have to learn much of it on your own, and messing up one step can have severe repercussions at later steps. So you're doing the right thing to ask, learn, explore and know beforehand. This forum is a great source of both information and experience. Still it's up to you to do the research and legwork to get the best outcome possible.
Hope this helps...