Why is it bad to not eat back exercise cals?

you don't HAVE to eat these calories back- unless you're really hungry and feel like you need to eat more.
my appetite fluctuates. I eat near 1200 to 1400 calories everyday, but sometimes I might eat 1500 or 1600.
It all depends. Just feel your body out! It's not a set rule you need to follow strictly.

That's how MFP works - your daily goal already has a deficit built into it. Meaning, eat to goal every day, do zero exercise, and you'll lose weight. Burning more cals through exercise leaves you with a much larger deficit, which can do you more harm than good, especially over time.

Food is fuel - don't sell yourself short by under-fueling your body while asking it to do normal daily functions and workout. Search the forums - you'll find countless threads from folks who have run into this problem - losing at first, but eventually finding weight loss stalled, lack of energy, and frustration because things aren't going as planned.

Especially at 1200-1300 cals a day, which is pretty much the bare minimum recommended for women, you should be eating at least some of those exercise cals back.

Good luck!

Very well put!

It's not just about the number on the scale. Healthy weight loss is about losing much more fat than muscle. Eating at a moderate deficit helps protect the muscle you've got.

Before you change anything I'm going to suggest doing the following if you are not already.

First your ticker says you only have 26 pounds to lose so you should only lose 0.5 - 1 lb per week to make it easier to maintain. If you have your activity set at sedentary you need to change it, very few people are actually sedentary. I can't see your diary or what kind of exercise you are doing so this makes it tough but I'm going to suggest increasing protein to help keep your lean body mass.

Second, if you are not weighing all of your solid food and measuring all of your liquids you are probably eating more than you think. http://www.myfitnesspal.com/topics/show/1135499-eating-more-than-you-think

Third, if you are using MFP to track your calories burned you are overestimating your burn. The calculator on MFP and many gym machines overestimates. You should use a heart rate monitor or fitbit type device to more accurately track burn.

Now, MFP is designed with a deficit already built in so you will lose weight by eating your exercise calories back. A good rule of thumb is that 80 - 90% of weight loss comes from diet and the rest from exercise. And as AmyRhubarb so elegantly stated over time you can cause damage to your body, I did.

If you read through the introductory forums there is a lot of good information about getting started, how to set your activity level, weight loss rates and calorie goals. Take the time to read through those.

Good luck and happy holidays!