I think im confused with the whole f3.5-5.6 written on the lenses (im a little slow) was some sort of fstop range, untill i realized you can set the fstop from 3.5 all up to past 22 in the camera itself. So if im shooting in A mode at f12 with said lens, what is going on with the camera? is it artificially compensated by shutter speed or iso? or am i totally lost?
The F stop range on your lens, F3.5-F5.6 refers to the lowest F-Stop available at a given focal length (ie Zoom setting). Lenses are measured by how low an F-stop they can achieve. The lower the number, the "faster" the lens. Having a low F-stop is expensive, it means the lens is wider, with better glass, and that costs money.
That range on your lens means that at 18mm zoom, the lens can open up to F3.5, but when you zoom it in to 55mm, it can only manage F5.6. This is totally normal in regular type lenses. The difference between what you are shooting, and what I am shooting, is directly related to that F#.
My lenses are capable of F2.8, which mean they can let a lot of light in, achieve quite a narrow focal plane (Depth of Field), and most importantly, they maintain that F2.8 throughout the Zoom range. That is why they are so friggen expensive. The greater the zoom, and the lower the F#, the more expensive they come. For example, an F2.8 400mm telephoto will run you about $10,000....
You CAN close the aperture down to F22 (very little light), but shooting up at F22 comes with a price - and that is slow shutter speeds. Hand holding for most people is generally accepted as 1/60th of a second or faster. I can get away with about 1/50th and maintain sharpness, any slower and I need to rest the camera, or use a tripod. With VR (Vibration Reduction), I can get away with about 1/15th of a second, which is SUPER slow, and used to be tripod territory.
The first thing you need to do is stop shooting in Auto. Set "A" or aperture priority, then go play. Shoot at F3.5, F11, F22, the works, then go see what the differences are on your computer. The LCD screen on your camera is not an accurate reflection of the shot. Always use your view finder to frame, NOT the LCD screen.
I hope that helps.