I don't understand how to properly credit LWJGL and all of its components in a commercial project. I know that I need to include the LWJGL license. Would it be okay to put it in a readme file that comes with the application? Also, I don't really get the wording used on the LWJGL FAQ answer to "Can I use LWJGL in commercial projects?" It says, "LWJGL is distributed under a BSD license which allows you to do whatever you want, as long as you include the LWJGL license, and any components you use (OpenAL, Jinput, Slick-Util, etc)." I am confused about the part that says, "as long as you include the LWJGL license, and any components you use." What does this mean? How do I include OpenAL when it is included in the lwjgl.jar. I looked it up and saw that OpenAL Soft is distributed under a license that requires you reproduce a copy of the library with the application. I just don't know how to do this.

I have browsed at GNU LGPL .
OpenAL-Soft license is LGPL v2. However LWJGL is known as a "work that uses this Library" and falls under sections 5 and 6 of the License. Thereby it's supported as a whole under the terms of the BSD License.
 

For more information about what I'm tolding you, and the terms of the Lesser GPL, here are section 5 and the important statement in 6 :

5. A program that contains no derivative of any portion of the Library, but is designed to work with the Library by being compiled or linked with it, is called a "work that uses the Library". Such a work, in isolation, is not a derivative work of the Library, and therefore falls outside the scope of this License.

And 6 says at the minimum :

(...)and distribute that work under terms of your choice(...)

Provided that you reproduces the BSD license of LWJGL in your work/software and/or source code, it is permitted by the license terms to link and redistribute the LWJGL library (including openAL), for free or a commercial use.

So, all i need to do is reproduce the LWJGL license? I also have another question. If I make a game engine using LWJGL, and plan to use the engine for a commercial game, do I still need to reproduce the LWJGL license (along with complying with the terms of the license I use on the game engine).

Yes you do. You can add your own terms, but still need to reproduce the LWJGL's BSD License as an attachment, at least.