confused about drupal html links to css, images, etc

I am a little confused about the concepts that Drupal uses for determining links which show up in the pages in generates. I have a few issues with how it is done (like why does drupal do a @import for CSS rather than just link the css - @import breaks most CSS validation tools!!).

But the concern i am most confused about at the moment is what it is doing to IMG hrefs.

- i add an image using TinyMCE
- in Tiny i need to add absolute path to image as "/files/img1.jpg" - which seems wrong to me from the get go

- but now; when i view my page i do not get the image (i can see area where it should be and i see alt text)

BUT VERY ODDLY:

- i do a view source of the page which has no image (although i can see box where image should be) and save this
- then i add that page to my root and go to that static html page and the image is fine (duhhh.. and why wouldn't it be.. the source says just as it should

- so why doesnt this show in drupal????

CLUE:

- if i go to drupal page where img doesnt show and i do a properties in my browser for the missing img.. i see http://mydomain/node/files/ov.jpg

- obviously this can't work since i have no folder called "node"...

but..

- how the hell does that get there?
- why do i not see it in source?

i suspect something along the lines of the "silly" base_url thing that used to be in drupal (which was a pain!!) that was removed in 4.7.... but it is NOT there now so shouldn't be modifying my urls

perhaps something to do with my httpd.conf settings or .htaccess???

DocRoot = .../mydomain - which seems correct; no changes to std .htaccess; no Aliases in httpd.conf

Any ideas???