In most games, you equip a weapon and use it to kill things. It doesn’t really matter what you equip, provided its numbers are big enough. The Witcher 2 is not like most games in this regard. By default, Geralt should equip two different swords, each used in a different type of situation. Steel swords damage humans and humanoid races like elves and dwarves. Silver swords damage monsters and monster-like sentient races like trolls, dragons, and succubi.
Usually when you enter combat, Geralt draws the appropriate sword for a situation automatically from his back. Sometimes you fight a mix of humans and monsters, though. These situations get tricky. You must decide which type of enemy you want to go after first and be careful not to end up attacking, say, a monster with a steel sword. Your blows won’t be wholly ineffective, but the damage you inflict is greatly reduced.
After you've played the game awhile, you should develop an instinctive feel for pulling out the right sword in the right situation. If you do need to switch swords during combat, make sure you don’t accidentally sheathe your sword instead. When your sword is sheathed, you cannot dodge roll. Losing your ability to dodge while surrounded by enemies can be a death sentence.