Do graduate schools care if letters are confidential or not? In general, graduate programs prefer confidential letters. Admissions officials say that it displays more confidence on the part of the applicant if letters are "confidential" (meaning you, the applicant cannot see the letter). The Letter Service is required to indicate on the letter if it is confidential or non-confidential.
Describe how you know the person. Give some context for your recommendation. Let the reader know how you met them, how you worked together, and your basic qualifications.