Know-how is the name given to information relating to ‘making something work’. Typically, this will relate to; inventions that are not patented, a non-patented aspect of an invention or even to optimising information on a patented invention.
If an invention becomes the subject of a patent application, it is important to include sufficient information in the specification such that a man ‘skilled in the art’ can follow the information and work the invention. There is of course a disadvantage to this, namely that other parties know how to work your invention, even if prevented from doing so for the duration of the patent. If the patent application fails then no protection has been achieved and yet other parties have been given information on how to work your idea. Sometimes therefore, it would be sensible to keep this information secret. This is then considered confidential information.
When licensing a patent it can be sensible to include any know-how in the licence agreement and provide this information to the licence as this can optimise the return on the licence.