Really confused about calorie deficit

Hi, I'm relatively new to MFP. Sorry if this sounds like a really dumb question, but I'm totally confused about creating a calorie deficit. MFP recommends I consume 1,200 calories per day for weight loss, based on the data I inputted. I have a long journey ahead of me, but for the first ten kg, I would like to lose weight at the rate of 1 kg per week, less after that afterwards (I will change it later). I exercise every day and I noticed those calories burned get added to my daily allowance in my food diary. Here's the question - how much under (if at all) my daily allowance + exercise calories (ie daily total) should I be in order to lose weight? I've been on this journey for 3 weeks and lost a total of 4.5kg, which I'm pleased about. I've never exceeded the daily total, but I'm often not under it by a lot, which confuses me. I thought that in order to lose weight at the maximum rate, I'd have to be quite a bit under. Someone in a post I read said that your daily allowance contains a built in calorie deficit which allows for weight loss. Is this true? Would really appreciate it if someone could clarify, hopefully I was clear in describing what I'm confused about. Thanks, Anita