Since you seem not to know anything in the schematic, you shouldn't be playing with micro-controllers in the first place, should you?
http://bit.ly/10OfaXRor (convince parents to) buy an electronics beginner game, or a book, or follow tutorials on youtube, google, books, local groups, come on...
Who do you think has the time to answer the questions that you did not bother to ask?
We will help, but make the first move. Learn some stuff for yourself instead of saying "pretty please, explain everything to me." And there's alot going on in that schematic, from a noob's perspective.
Build something, and I mean simple stuff, an LED, a resistor and a battery. Verify Ohm's law, learn to use a capacitor, a diode, a transistor. Build simple 1-2 transistor circuits.
Visit the local electronics shop for kits or order them online, try to get ones that you'll actually use when completed.
I love to see people interested in electronics, but I totally dislike Arduino as a first step in doing that. Yes, you might accomplish the goal, but you have no idea why, how, or what to do if it's not working. If you don't have basic EE knowledge you don't stand a chance at figuring it out.
So do yourself a favor and if you really mean it, take some time and study. The internet is full of good material and it's very easy to find it.