Installing Metafont fonts is (by comparison with other sorts of font) rather pleasingly simple. Nowadays, they are mostly distributed just as the MetaFont source, since modern TeX distributions are able to produce everything the user needs “on the fly”; however, if the distribution does include TFM files, install them too, since they save a little time and don’t occupy much disc space. Always distrust distributions of PK font bitmap files: there’s no way of learning from them what printer they were generated for, and naming schemes under different operating systems are another source of confusion.
“Where to install files” specifies where the files should go.
Further confusion is introduced by font families whose authors devise rules for automatic generation of MetaFont sources for generating fonts at particular sizes; the installation has to know about the rules, as otherwise it cannot generate font files. No general advice is available, but most such font families are now obsolescent.