HOWTO convert documents to Kindle / mobi format?

Question

I have an HTML file (XHTML 1.1 strict, if you want to be technical about it) that I am trying to make into a Kindle format (.mobi) book.

I've been trying to use calibre and have found the process to be very confusing.

1. Are there other options besides calibre? (If so, what are they?)

2. For people who have made Kindle/mobi documents, what have you used as your 'source' materials? Plain text? (X)HTML? Markdown? Word/Pages/Scrivener/etc?

3. If you have used calibre, how did you figure out which options you needed to use and which to just leave along? There's a metric buttload of them.

ps - yes, it would be nice if Kindle would just accept ePub files, wouldn't it?