Great response, that really helped me a lot. 
I do have one question though, and it's more a request for clarification than an actual question:
As I've been reading and reading and reading about Bitcoin, the nagging thought in the back of my head has been: how can I (if possible) use this system to pay for those core things that I need to live, such as groceries and rent. The answer to that, in my mind, has been that I will, at the end of the day, need to convert BTC to USD in order for the BTC to basically "interface" (for lack of a better term) with other, more widely circulated currencies; basically the currencies that we use day to day. That is, I imagine, where an exchange comes in.
My biggest concern has been the trustworthiness of the exchange, but I think I've been considering it all wrong: I've been thinking of exchanges as, essentially, banks that have a quantity of money and I pay them, then they pay me in Bitcoins. There is, of course, the concern for fraud, which is one of the things that BTC is trying to create a system against.
But am I thinking about it wrong? Do these exchanges purely facilitate the trade of Bitcoins-to-USD/CAD/EUR/whatever between the users? So that I go to, for instance, Mt. Gox, put a proposed exchange, and then I'm contacted by the user with the appropriate currency to then do the exchange, and everything is done directly so that there is no intermediary that acts as a bank to hold money for me (or anyone else) to withdraw from? Or is it these services that act as escrow, essentially?
I apologize if these questions seem pretty rudimentary, but I'm intrigued by the prospect of BTC as a thing, and I'm always and forever interested in crypto-anything, so why not get involved in cryptocurrency?
I do have one question though, and it's more a request for clarification than an actual question:
As I've been reading and reading and reading about Bitcoin, the nagging thought in the back of my head has been: how can I (if possible) use this system to pay for those core things that I need to live, such as groceries and rent. The answer to that, in my mind, has been that I will, at the end of the day, need to convert BTC to USD in order for the BTC to basically "interface" (for lack of a better term) with other, more widely circulated currencies; basically the currencies that we use day to day. That is, I imagine, where an exchange comes in.
My biggest concern has been the trustworthiness of the exchange, but I think I've been considering it all wrong: I've been thinking of exchanges as, essentially, banks that have a quantity of money and I pay them, then they pay me in Bitcoins. There is, of course, the concern for fraud, which is one of the things that BTC is trying to create a system against.
But am I thinking about it wrong? Do these exchanges purely facilitate the trade of Bitcoins-to-USD/CAD/EUR/whatever between the users? So that I go to, for instance, Mt. Gox, put a proposed exchange, and then I'm contacted by the user with the appropriate currency to then do the exchange, and everything is done directly so that there is no intermediary that acts as a bank to hold money for me (or anyone else) to withdraw from? Or is it these services that act as escrow, essentially?
I apologize if these questions seem pretty rudimentary, but I'm intrigued by the prospect of BTC as a thing, and I'm always and forever interested in crypto-anything, so why not get involved in cryptocurrency?