Goal calories/net calories and weight loss

When you set up MFP, it figures out how many calories your body needs to just to survive, then takes into account how active you are (you chose that). This is based only on what you do day to day, it does NOT include exercise. It uses this to figure out how many calories you need to maintain your weight. This number is the base number your body needs live day by day. You will not gain or lose weight at this number. Then you selected your weight loss per week goal. It then subtracted how many calories you need to cut back on in order to get that goal per week.

So lets say you need 2000 calories to maintain and you select 1 lb per week. It will take away 500 calories ( 7 days x 500 calories = 3500 calories or 1lb). So MFP will tell you to eat 1500 calories per day. You don't need to (and shouldn't) burn more you take in in order to lose weight. You only need to create a modest deficit to lose weight at a healthy rate.
If you go and exercise, MFP has not accounted for that, so it tells you to eat them. So MFP shows your calories eaten for the day, and subtracts the calories burned in excerise to give the net total for the day, that is what the net calories mean on MFP.

So if I understand this all correctly regardless of if you exercise or not you should only eat at most the calorie goal that MFP set up for me?

I am not sure I understand.
If you don't exercise, you eat the number MFP gives you, say 1400. That is already a deficit without even exercising.
If you do exercise, you eat that number, plus the calories earned through exercise. So if you are supposed to eat 1400 and burn 200, you should eat 1600 that day. That creates a net intake of 1400. Calories eaten - calories burned in exercise = net calorie intake for that day. 1600-200=1400.

How can you lose weight if your goal/net calories are a positive number? I thought you needed a net deficit in calories to lose fat

The thing you seem to be missing is that you burn calories by being alive. You are actually eating less than you're burning.

2148 calories eaten
-388 calories burned through exercise
-2760 calories burned by walking around doing stuff, keeping your heart beating, etc.
= -1000

So it's OK to eat the extra calories earned through exercise?

For example, if my calories daily goal is 1760(1000 deficit) without exercise and I burn 388 Calories through exercise then I may eat up to 2148 in total and still be at my 1700(1000 deficit) and still on track to lose my goal weekly rate(2lbs BTW) providing all following days are similar?

yes - thats exactly the way this site is designed