By default, the Emacs interface connects to the default database, databases file. If you want to connect to another database, use the command M-x gnats-change-database. It will ask you for the database name to use, server and port it can be accessed on, and your login name.
If you want to use the gnatsd command, gnatsd, directly, without connecting to a remote server or the localhost connection port, provide your local file system full path to gnatsd as the server name. Port number does not matter in this case.
If the database requires a password to allow you the access to it, you are prompted for the password the first time you connect to the database. If you provide an invalid password, you cannot connect to the database anymore and you have to run the M-x gnats-change-database command again.