Thanks to a PM from Fulcrum to help me solve this.
Turns out I was on the right track, you have to create your own local connection.
Click: File > New Connection > MySQL
Name the Connection local (or whatever you want actually) put in the password you used for root when you set up MySQL. You can click the Test Connection button then click OK.
Now in the left-hand pane is the connection you created, right-click it, choose New Database, name it PEQ, and etc...
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