Question about allowed calories and exercise

It's how MFP's "program" works. When you signed up here you chose a rate of weight loss (or gain... or even maintain) but assuming loss then MFP gives you calories to eat to lose that weight without doing a lick of exercise.
Exercise burns calories so makes your defecit greater than "it should be", so we're supposed to eat back our excercise calories to keep our deficit at the intended level.

Yes, but you don't want your deficit to be too large or you can damage your metabolism. MFP is set up so you lose your goal amount of weight, whether you exercise or not. When MFP gives you your daily goal it gives you a caloric deficit to lose your goal weight/week. So if you chose to lose 1 lb/week mfp gives you a daily deficit of 500 calories. If your maintenance calories are 1800 MFP would give you 1300/day to lose 1 lb/week (1800-500). So now if you burn 600 at the gym your deficit is now 1100 (500+600) which is more than your goal of 500, so MFP adds the 600 back in and you eat all 1900. This way you meet your weekly goal. If you don't eat them back you may not be getting enough fuel. If you ate 1300 and burned 600 your body would function like you only ate 700 (1300-600) and did not exercise. 700 is not enough.

Here's some in depth/no so in depth answers to your question.

http://www.myfitnesspal.com/topics/show/10589-for-those-confused-or-questioning-eating-your-exercise-calo

http://www.myfitnesspal.com/topics/show/6556-the-answers-to-the-questions?page=1

You should be eating at least 1/2 if not all your exercise calories so your metabolism stays regulated and you don't enter "starvation" mode. MFP already figures a daily deficit for you which, should never drop below 1200 Calories for Females and 1500 Calories for Males.

I have been following the plan, using my goals, and have lost 25 pounds in about 2 months.

:flowerforyou:

When I exercise I normally stick to my original calorie goal...sometimes a LITTLE bit over. I think it's counteractive if you eat ALL the calories you're burning...My advice is to make sure you're eating at least to your original calorie goal on the days that you exercise. That's at least what I aim for!

Be careful with this. It may work if you have a lot to lose but the less you have to lose the smaller your caloric deficit should be. Not eating enough to fuel your workout can actually cause your body to burn muscle, instead of fat, to use as fuel.

Ok so the calories MFP initially assigned me is without exercise included. But when I signed up MFP asked me how many days and for how long I planned on exercise so I thought they did factor that in. Is that not true?

This is just to set a fitness goal for yourself and is supposed to help hold you accountable for exercise you intend to do throughout the week.