1200 calories a day before or after exercise?

I think it's a personal preference based on the results you want/or get. Some people need to extra calories to fuel their bodies and actually lose more by replenishing those calories. Some people will continue to lose without them. It probably also depends on what your starting weight is and how much you have to lose.

Personally, I will allow myself a few extra calories on workout days, but I don't eat them all because I know there are some days I go over when I don't exercise.

You will get different opinions on this. According to MFP you should eat your exercise calories. A deficit has already been built into the calorie allowance asigned my MFP. The science and maths is solid that you shouldn't have a deficit of more than 1000 calories in general. Regardless of what eating too little will do to your weight loss it is just not healthy for you unless you are severly obese and have serious health issues. So i eat my exercise calories. However this is because I am very strict with my logging, i.e. I weigh what i eat and enter the information myself if I can't find an entry I am happy with. I also use a heart rate monitor so my calorie burns are accurate. I am loosing weight this way, as per the MFP design. If you are not using a HRM, the calorie estimations are usually too high. Also people tend to log less calories than consumed initially, I did. Do what you feel is best for you and good luck!!

"still see many people that are confused or "question" the idea of eating your exercise calories. I wanted to try (as futile as this may turn out to be) to explain the concept in no uncertain terms. I'll save the question of "eating your exercise calories" for the end because I want people to understand WHY we say to do this.

NOTE: I'm not going to use a lot of citation in this, but I don't want people thinking this is my opinion, I have put much careful research into it, most of which is very complicated and took a long time for me to sift through and summarize, and thanks to my chemical engineering backgroud I have the tools to read clinical studies and translate them (somewhat) into more human terms. Some of this information comes from sources I can't forward because they are from pay sites (like New England Journal of Medicine), so you can ask for anything, but I may or may not be able to readilly provide it for you (I can always tell you where to go if you want to though).

I'll break it down into 3 sections.
Section 1 will be our metabolic lifecycle or what happens when we eat and how our body burns fuel.
Section 2 will be what happens when we receive too much, too little, or the wrong kind of fuel.
Section 3 will be the steps needed to bring the body to a healthy state and how the body "thinks" on a sympathetic level (the automatic things our body does like digestion, and energy distribution).

Section 1:
Metabolism, in "layman's" terms, is the process of taking in food, breaking it down into it's components, using the food as fuel and building blocks, and the disposal of the poisons and waste that we ingest as part of it. Metabolism has three overall factors, genetics, nutrition, and environment. So who we are, what we eat, and how we live all contribute to how our metabolism works. You can control 2 of these 3 factors (nutrition, environment).
When you eat food, it is broken down into it's component parts. Protein, vitamins and minerals are transported to the cells that need them to build new cells or repair existing cells. Fats(fatty acid molecules) and carbohydrates are processed (by 2 different means) and either immediately burned or stored for energy. Because the body doesn't store food in a pre-digested state, if you eat more carbs and fat then you need immediately, the body will save them for later in human fat cells (adipose tissue). This is important to realize because even if you eat the correct number of calories in a 24 hour period, if you eat in large quantities infrequently (more then you can burn during the digestion process), your body will still store the extra as fat and eliminate some of the nutrients. (Side note: this is why simple or processed carbs are worse for you compared with complex carbs)

Section 2:
The human body has a set metabolic rate (based on the criteria stated above), this rate can be changed by overall nutritional intake over a period of time, or by increasing activity levels also over a period of time (the exact amount of time for sustained increase in metabolic rates is the subject of some debate, but all studies agree that any increase in activity level will increse the metabolism).
It is important to note that obesity does not drasticly change the level of metabolic process, that means that if you become obese, you don't burn a higher fat percentage just because you have more to burn.
The balance of incomming fuel vs the amount of fuel the body uses is called maintenance calories, or the amount of calories it takes to run your body during a normal day (not including exercise or an extremely lethargic day). The metabolism is a sympathetic process, this means it will utilize lower brain function to control it's level, it also means it can actively "learn" how a body is fitness wise, and knows approximately how much energy it needs to function correctly. It also means automatic reactions will happen when too much or too little fuel is taken in. Too much fuel triggers fat storage, adipose tissue expands and fat is deposited, also free "fat" cells (triglycerides) will circulate in the blood stream (HDL and LDL cholesterol). Too little fuel (again, over an extended period) triggers a survival mode instinct, where the body recognizes the lack of fuel comming in and attempts to minimize body function (slowing down of non-essential organ function) and the maximization of fat storage. It's important to note that this isn't a "switch", the body does this as an ongoing analysis and will adjust the levels of this as needed (there is no "line" between normal and survival mode.).
When you're activity level increases, the human body will perform multiple functions, first, readily available carbohydrates and fats are broken down into fuel, oxydized, and sent directly to the areas that need fuel, next adipose (body) fat is retreived, oxydized, and transported to the areas it is needed for additional fuel, 3rd (and this is important), if fat stores are not easilly reachable (as in people with a healthy BMI where adipose fat is much more scarce), muscle is broken down and used for energy. What people must realize is that the metabolism is an efficiency engine, it will take the best available source of energy, if fat stores are too far away from the systems that need them or too dense to break down quickly, then it won't wait for the slower transfer, it will start breaking down muscle (while still breaking down some of that dense fat as well).

Section 3:
The wonderful part of the human metabolic system is it's ability to adapt and change. Just because your body has entered a certain state, doesn't mean it will stay that way. The downfall to this is that if organs go unused over a long period, they can lose functionality and can take years to fully recover(and sometimes never).
As long as there is no permenant damage to organ function, most people can "re-train" their metabolism to be more efficient by essentially showing it (with the intake of the proper levels and nutritional elements) that it will always have the right amount and types of fuel. This is also known as a healthy nutritional intake.
Going to the extreme one way or the other with fuel consumption will cause the metabolism to react, the more drastic the swing, the more drastic the metabolism reacts to this (for example, a diet that limits fat or cabohydrate intake to very low levels). In general terms, the metabolism will react with predictable results if fuel levels remain in a range it associates with normal fuel levels. If you raise these fuel levels it will react by storing more fat, if you lower these fuel levels, it will react by shutting down processes and storing fat for the "upcomming" famine levels. The most prominent immediate issues (in no particular order) with caloric levels below normal are reduced muscle function, reduction of muscle size and density, liver and kidney failures, increase in LDL (bad) cholesterol levels, and gallstones .


Now onto the question of "Eating your exercise calories"

As I have hinted to throughout this summary of metabolic process, the body has a "range" in which it feels it is receiving the right amount of fuel. The range (as most doctors and research scientists agree) is somewhere between 500 calories above your maintenance calories and 1000 calories below your maintenance calories. This means that the metabolism won't drastically change it's functionality in this range, with that said, this is not exact, it is a range based on averages, you may have a larger or smaller range based on the 3 factors of metabolism stated at the top.
On our website (MyFitnessPal), when you enter your goals, there is a prebuilt deficit designed to keep you in the "normal" metabolic functionality while still burning more calories then you take in. This goal DOES NOT INCLUDE exercise until you enter it. If you enter exercise into your daily plan, the site automatically adjusts your total caloric needs to stay within that normal range (in other words, just put your exercise in, don't worry about doing any additional calculations). Not eating exercise calories can bring you outside that range and (if done over an extended period of days or weeks) will gradually send your body into survival mode, making it harder (but not impossible) to continue to lose weight. The important thing to understand is (and this is REALLY important) the closer you are to your overall healthy weight (again, your metabolism views this a a range, not a specific number) the more prominant the survival mode becomes (remember, we talked about efficiency). This is because as fat becomes scarce, muscle is easier to break down and transport. And thus, the reason why it's harder to lose that "Last 10 pounds".

I really hope this puts a lot of questions to bed. I know people struggle with this issue and I want to make sure they have the straight facts of why we all harp on eating your exercise calories.
"

In a nutshell, if you're eating 1200 calories a day, you're most likely already in a deficit from what your BMR is. You BMR is how many calories your body needs per day to sustain your basic life functions. Heart beating, breathing... etc.
If you create too much of a deficit you could cause your body to panic and in turn, store fat. That's why it's important to eat when you're trying to lose weight. Too much exercise creates too much deficit if you don't eat some of those calories back.
Eat healthy food, drink water and exercise to strengthen and tone muscle. Muscle turns you into a fat burning machine.

I aim to have a 1,000 deficit between my burn and my intake.
I have a Bodybugg to do this, so that I don't have to guess.

My daily goal is to take in 1600 calories and to burn 2600 calories. If I burn more, I eat more.So I guess if I were to strictly use MFP for my calorie needs (like if I didn't have my Bodybugg), I would more than likely end up eating back my exercise calories.

I'm not sure that helps you. Sorry, LOL

God bless!