Please help me understand the Net Calories

Yes, you have it right. Net calories are calories consumed minus calories burned. So in order to get to at least 1200 net calories a day, or to get to your goal, you have to eat some or all of your exercise calories.

Ok so at the end of the nigt when you total up all you calories and exercise calories used whatever is on your net calories is your actual calories consumed that day? please help haha

When you type in your goals and activity levels into MFP it calculates what you need to eat (calories) to "survive" (maintain as is). So, ie, maybe you, sleeping, walking, brushing your teeth, pumping blood, etc (just BEING), burn 1700 calories over the course of the day. If you exercise that is activity that MFP has not counted into your daily burn count, so you need to add those calories on. So, you work out 400 calories and add those in - MFP now know that you just BEING for that particular day require 2100 calories. So, at the end of the day - everything you have collectively done, from breathing to running on the treadmill has burned all 2100 calories.

Now, should you be looking to lose weight, you tell it how much and how fast you want to lose and it will set a deficit for you. Subtracting somewhere in the range of 300-700 calories a day from your BEING count (your base, maintain-how-you-are-now caloric need). So, MFP tells you - you should eat 1200 calories a day to lose weight at 1 lb a week. (1700-500). Now you run 400 calories on the treadmill. MFP has not accounted for this caloric need in your safe and effective weight loss, based on your base numbers, so it tells you - you have been active. You need to eat more. You need more fuel to maintain a healthy balanced weight loss. So it adds those 400 on to your daily need count - 1200+400 = 1600.

So, you eat 1600 calories today. Well, you still BURNED 2100 calories total over the course of the day. So you are still at a 500 deficit and still losing weight.

So, the actual calories you ATE was 1600.
the actual calories you BURNED was 2100 (1700 just Being, and 400 exercising extra)
Your NET calories are how many you are giving your body to function/maintain just BEING. (Ate calories - Extra burned calories)

If you need 1700 to BE and eat 1200 and work out 500 extra - you have given your body 700 calories to BE/EXIST. That is too low for a healthy existence long term, considering that just being you need to have 1700 calories (in this example). You body will not necessarily just burn those extra 1000 calories a day off of your body fat. It'd be nice if it worked that way, but we are way to complex for that.

I bring this up because if you eat back the calories burned via exercise to prevent a net below YOUR BMR then how can you lose any weight?

Too much stock is put in BMR by some people on this site. You should be concerned with your overall calorie expenditure when it comes to losing weight, which is your total daily activity - normal activity level plus exercise calories. I don't worry about BMR at all - I eat the amount MFP tells me to eat plus most of my exercise calories - some days I'm below BMR (many days, when I'm doing 1200/day before exercise) and some days I'm not, but it's never hindered my weight loss.

My understanding of My Fitness Pal Calorie Calculator.

I am glad that I found this post. Now, I am clear why my food calorie allowance magically increases the day I do exercises.

The difference and confusion lies in the philosophy of weight loss and calorie tracking.

1) Philosophy-2: Get a fixed amount of "NET" calories e.g. X calories per day.
2) Philosophy-1: Get a fixed amount of "FOOD" calories e.g. Y calorie per day.

My Fitness Pal uses the first philosophy, where you're supposed to get X calories no matter what. This means if you exercise, and burn calories than you can eat more and you're supposed to eat more. At the same time, if you don't burn any calories, then you will be eating specified number of calories. This will still create a calorie deficit. A very important thing to notice is that in the second philosophy, your daily calorie deficit is constant (as specified in the Goals section).

Consider a person, Santa, whose Basal Metabolic Rate(BMR) is 2000 calories per day. Now, in order to lose a certain amount of weight per week, Santa needs to create a daily calorie deficit. Say, Santa wants to lose 1 lb per week, and for that he needs to create a 500 calorie deficit every day. So, now how many calories Santa should get?

Calorie Burned = BMR+Exercise
Calories In = Food Intake
Calorie Deficit = Calories In - Calories Burned.

Say, Santa hates working out and does not have any calories burned in the exercise. Therefore, the only calories burned, is by the way of BMR.

so, 500 = Calories In - 2000 i.e, Calories In = 1500 per day. So, if Santa ate 1500 calories per day, then he will have a deficit of 500 calories per day, and that will lead to weight loss of 1 lb/day.

But say Santa decided to work out on the day before Christmas. And burned 700 calories in preparing the reindeer. Now the equation has changed.

500 = Calories In - (2000+700) i.e. Calories in = 2200 per day!

Whoa, now suddenly Santa can devour up to 2200 calories! But that's only because, he burned off 700 calories.

Notice that the calorie deficit is the same in both instances. It is 500 calorie per day.

2) Say Santa decided to get fixed food calories of 1500 calories per day. Now consider two scenarios again,

a) No Exercise:
Calorie Deficit = Calories In - Calories Out
Calorie Deficit = 1500 -2000
Calorie Deficit = 500 per day

b) 700 calories in Exercise
i.e. Calories Out = BMR+Exercise = 2000+700=2700
Calorie Deficit = Calories In - Calories Out
Calorie Deficit = 1500 -2700
Calorie Deficit = 1200 per day

In the case of b) above, notice that the Calorie "Deficit" increased!

You might feel that having higher calorie deficit is a good thing for faster weight loss, but as someone mentioned in one of the posts: Not eating enough
1) will prevent your body from getting enough nutrition,
2) might reduce the metabolism
3) will cause weight gain when you go back to your regular calories.

While eating enough calories (by making sure you that you meet your daily NET calories), you will ensure that you're not malnourished, and your body loses weight consistently.

After understanding this, I am beginning to like this approach of fixed daily calorie deficit vs. variable daily calorie deficit.

I hope this helps.