@Terry , the why and how is maybe less deliberate and planned and more trial and error.
My usual denoise is non-local means (auto) - which I have auto-applied to my images captured by Nikon on import. For most images it is perfectly adequate and I leave well enough alone. On occasion, especially with monochrome, I find wavelets (auto) performs better, according to my taste.
It is only when I have large amounts of noise and want to achieve something in particular that I go a little crazy with tweaking the settings. I usually leave the search radius low until I have a reasonable result, then, depending on the image, I might crank it to 15 or so if I want better denoising without further loss of detail, or - as in this case - go almost spinal tap (i.e. to “11”).
With high ISO images my cameras tend to have particularly noticeable (to me) noise in large areas of a single colour - so the “black” foreground in this instance. With this image I can live with the graininess in the sky when I disable denoise, but I the noise in the foreground is anathema. So for this one I play with the preserve shadows slider to seek the best compromise between eliminating random noise and introducing too much red into the foreground.
The strength I usually like to keep fairly low - no more than 1.5, and frequently 1.1 or 1. On this image, I was not too concerned with the “oil painting” or loss-of-detail-look. Again - a compromise and experimenting.
patch size, Scattering and central pixel weight are likewise adjusted by me as “experiment on the basis of the tooltips.”
I did have another go with bias correction but I dislike the unnatural effect in the sky.
Seriously, I am a blunt instrument kind of guy - what works, or works well enough, is usually sufficient. I use masks too little, basically due to efficiency reasons (laziness). @kofa is a lot more across the subtleties of the denoise module, as I recall from a previous playraw.