Retreived from: https://linuxcritic.wordpress.com/2010/04/07/anatomy-of-a-desktop-file/

Anatomy of a .desktop File
--------------------------
One of the beautiful things about Linux is that developers tend to be 
conscientious about the use of technical standards. Freedesktop.org 
maintains a wide series of standards for X Window System desktops, 
which apply to Gnome, KDE, LXDE and XFCE (I'm not sure whether Fluxbox 
implements these standards.) The standard for "desktop entries" is still
technically a draft, but is generally accepted by the larger X community.

The .desktop file fills two primary functions: first, it informs the 
desktop environment how the file is to be handled by the desktop 
environment with regard to menu placement, display, environmental 
variables, and similar. In this function, it resides globally in 
/usr/share/applications/ and for specific users in $HOME/.local/applications. 
The second function is the direct shortcut on the desktop itself. In 
this function, it resides in $HOME/Desktop. The same file fills both 
functions, so if you want to have an application both in the menu and on 
your desktop, you'll need to put the .desktop file in two places. Let's 
take a closer look, shall we?

The .desktop file is generally in a key,value pair format. This means 
that, generally speaking, each line will look like this:

key=value
Required Elements

Type - specifies the type of desktop entry. Currently, there are three 
       valid types: Application, Link and Directory.
Name - The name of the specific application or directory. This determines 
       the actual display name for the menu/desktop entry.
Exec - provides the actual command to execute, with associated arguments 
       (if necessary.)
       
Optional Elements
-----------------
Version     - specifies the version of the Desktop Entry Specification
              to which the .desktop file conforms (currently 1.0).
Encoding    - The encoding for the .desktop file. The standard calls for UTF-8.
GenericName - specifies the generic name of the application.
NoDisplay   - This is a boolean (i.e. true/false) element. If set to 
              "true", it means "this application exists but should not 
              appear in menus." This is most frequently used to associate 
              an application with MIME types so file managers know how
              to handle things.
Comment     - specifies tooltip entries for the file.
Icon        - specifies the icon to be used. This entry supports both 
              icons supported under the FreeDesktop Icon Theme 
              Specification (which I haven't yet fully grokked) as well 
              as absolute paths.
Hidden      - another boolean entry which, if true, essentially treats
              the application as having been deleted.
OnlyShowIn  - If you use multiple desktop environments (say, for instance, 
              you use both Gnome and LXDE) and only want the .desktop 
              entry to apply to a few of the environments, this line 
              specifies the environments in which the entry should apply.
              This entry is mutually exclusive with NotShowIn.
NotShowIn   - As above, but instead of specifying where to display the 
              entry, it displays where NOT to display the entry. This is
              more useful if you have numerous environments but only want
              to exclude one or two.
Path        - specifies the working directory for an application to run in.
Terminal    - a boolean entry which specifies whether or not the 
              application requires a terminal to run.
MimeType    - specifies any associated MIME types with this application.
Categories  - Categories in which this application should appear in 
              menus. Supported categories vary from system to system, 
              but there is an emerging standard for categories.

Finally, any line beginning with an octothorpe ("#") is considered a comment.

Putting It All Together
-----------------------
Now that we have all the elements, we can open up any text editor and 
create a .desktop entry. Here's a very simple sample:

[Desktop Entry]
Encoding=UTF-8
Version=1.0
Type=Application
Terminal=false
Exec=$HOME/MyApp
Name=My Application
Icon=$HOME/Icons/MyIcon.png

Save your entry (as filename.desktop), then put a copy in 
$HOME/.local/applications and (if you want) another in $HOME/Desktop. 
If you did it right (and if you're running Gnome, KDE or LXDE), your new
application should show up in your menu and (possibly) on your desktop.