x & y are its origin coordinates. Generally top-left position -> rectMode(CORNER);
w & h are how large and how tall the object is.
And c is used for its fill() color.
You can use different names of course! 

To check if the mouse pointer is inside the object, we need the algorithm below:

 if (mx > x & mx < x+w & my > y & my < y+h) {...}   // where mx & my are the mouse pointer!

Here's my complete example. Any doubts about it, just ask:

final static color c = #00FFFF, bg = 0200;
final static short w = 80, h = 60;

int x, y;
boolean isInside;

void setup() {
  size(200, 200);
  noLoop();

  fill(c);

  rectMode(CORNER);
  ellipseMode(CORNER);

  x = width/2  - w/2;
  y = height/2 - h/2;
}

void draw() {
  background(bg);

  if (isInside)    ellipse(x, y, w, h);
  else             rect(x, y, w, h);
}

void mouseMoved() {
  int mx = mouseX, my = mouseY;

  if (mx > x & mx < x+w & my > y & my < y+h)  isInside = true;
  else                                        isInside = false;

  redraw();
}