A connection refers to any system that you want to integrate to or from. It may be a 365 Sales/CRM organization, a Dynamics NAV/GP on-premise solution, Salesforce instance or any of our available connectors. When you create that “connection” you are then able to use it in a data source or as a destination.
Generic data sources such as Excel, Text or XML files do not require a separate connection to be setup. These do not count towards your connection limit.
If you run two separate CRM instances for your organization then each one of these would be a connection.
Test environments and development environments will require their own connections and will count towards your limit. You can upgrade during implementation and then downgrade when these connections are no longer required.