Hello!... and did I get this right?

Hi!
I'm new to myfitnesspal, and joined a week ago! I greatly enjoy using it, but so far have been too shy to post on the forums... but here I go!

I have everything mostly figured out, thanks to some googling, I think I get how MFP works... but I'd like some confirmation, please.

My daily intake is set at 1200 cals to loose 1 pound a week.

So basically, MFP calculates my Total Calorie Needs available in "goals". It probably uses the Harris Benedict Equation (Basal metabolic rate x appropriate activity factor).Too loose about 1 pound a week, you're supposed to have a 500 calorie deficit (so says the internet, and MFP at least). So for me, 1600-500= 1100, but because the American College of Sports Medicine recommends the minimum amount of calories needed per day at 1200, that is my lowest limit allowed by MFP?

Also, the reason that we are encouraged to eat the calories we've lost in exercise is because the number of calories recommended by MFP is already creating a calorie deficit? In other words, if we are doing exercise our daily calories burned increase with exercise. So does our recommended intake, so that in the end MFP is still getting us to have a (for example) 500 calorie deficit? (i.e. no exercise supposed to burn 1600, so MFP recommends 1200. with exercise burn 2000, so supposed to eat 1600, and there is still a deficit?) Is that how this works?

Anyway I hope I got this right! I am hoping to loose a little weight and then to be able to maintain it... as well as have a healthier happier lifestyle.....

Thanks!