I just installed Fedora Core 2 on my laptop and so far it works great. It was the smoothest installastion I've had (of anything) in a long time. Anyways, I do have some questions. I am aware of the package concept, and the up2date utility which updates packages. However, I am confused as to how to install my own programs. Back in Slackware I compiled everything from source and I could do that here too, but, how do I work with RPM files? What exactly are they? Do they include dependencies or something? Say I have an .rpm file sittin in my home directory, how do I install the program?

Yum comes standard with FC2, do the usual, 'man yum'. You could install apt-get and synaptic (apt-get front end) to get a better way of updating/installing your application off the net too. I regularly use synaptic to update my distribution. Yum & apt-get will help you resolve any dependencies required during rpm installation.

If you've an .rpm file, the easiest is to do

rpm -ivh package_name.rpm

As usual, do a man rpm to get more info on how to use rpm.

right, so I did
rpm -ivh <filename>.rpm
I did it with a user first, and got an error about not being able to access /usr/src/redhat/SOURCES/. I switched to root. This time I got some warnings about a group not existing, but nothing happened. I then went into that folder mentioned above and found a <name>.tar.gz. The file with the sources I could download and compile myself. So... what's the deal? Isn't -i suppose to install this?

Curious, what package you're trying to install? In RedHat world, there are two kind of packages, one for binaries (RPMS) and the other one for sources (SRPMS).