Yeah, it seems an accurate assesment to say that users are the basic catagory of ownership.
The next part is simpler than you're making it out ot be I think. When you se the panel to create a E-mail address (just an e-mail address, not a user account) then it creates the mailbox at the domain you selected, and you get this m123454578 thing. The only time you need to know that m* login is for setting up an E-mail client like outlook express or Thunderbird.
When you go to log into webmail, you just enter your E-mail address and password, you don't need to memorize that M* number.
It's true that you can set up a user, and have the panel also create them an E-mail address during the process. This E-mail address will not have an M* associated with it, but will use the user name for E-mail clients, and webmail works the same as any other E-mail address.
Yes, all user names must be unique across your server (not just for your plan, but for your server). As fas as domains go, each domain has to be assoicated with a user, but multiple domains can be associated with that user. If you want, all 160k domains can be associated with that one user, or you can spead it out across as many users that you plan allows.
Each domain is seperat from all others. The user associated with the domain will get a folder for each domain. Files, settings, everyting is adjustable on a per domain basis.
If you were given a M* login for your E-mail address then you will need to use that as the login name when setting up your E-mail client. There's a page in the k-base that walks you through setting up outlook express for E-mail. That should be of some help. There's proably information in the Wiki too.
No, the outside world will never see your M* it will always disply your name and or E-mail address. The m* is only used for the user name for POP/IMAP from your E-mail client. For webmail, you just ned to know the E-mail address and the password.
FYI, dreamhost is activly working on changing the system so it doesn't use the m* any more. They had hoped to have it changed with the upgrade to debian sarge on the servers, but it's proving more difficult than they thought it would be. So, it's in the works - but it's not here yet.