I'm not sure which formats can be used on the 'All New' kindle paperwhite. I tend to prefer azw3 so that I can use custom fonts. Kindles don't read epub, so if you buy an epub which is DRM'd you'll need to strip the DRM before conversion to mobi or azw3 etc. If you try to convert a DRM'd book Calibre will tell you that it can't be done.
Alf enables you to strip the DRM.
If you buy a book from Amazon, which may or may not be DRM'd, you can just put this onto your kindle. No need to bother with Calibre unless you want to create metadata etc using Calibre.
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