AE CS3 and 4 - Masks and Compositions

Hey all,

Im a student in media and communication currently doing
production among other things, previously I did live TV production. As I am
still learning (and forever will be!) I have found this site tremendously
helpful and am hoping the community can help or point me to relevant articles.

What I want help with is in After Effects. I have some use
with it, though Im not nearly as comfortable with it as I am in Premiere,
which is not to say I am a pro or anything. So, bare with me as I ask:

1. What is a composition exactly and what is it
   used for exactly? Some tutorials require you to make a composition, others do
   not, meaning you throw footage in and use it. Is it like Sequences in premiere,
   where, once you create one you can insert the entire sequence in another which
   encompasses all the edits as opposed to copying and pasting everything on the
   timeline into another sequence? I know that a sequence is created automatically
   when you dont create one.
2. I look at tutorials that require a lot of
   masking. Ive done some, such as replacing what you see on a TV screen, but say
   you want to do special effects where you first have an exploding sausage and
   want to make it look like an exploding head, I seem to not grasp the concept of
   masking nor can I find anything online to show me the basics. I know the pen
   tool is used as a mask when you want t draw something specific, but aside from
   this I seem to be lost, for example, by not knowing which footage in the above
   scenario would you put as number 1 or 2.

Any help is greatly appreciated!