You have the basic idea. You can build up a theme using html and css as you see fit. That controls the look and feel basically.
The php brings the content and function. I learned to make themes by picking at other themes until I figured out what the php did. You can look up each template tag in the codex to get an idea of what it does
The ‘twentyten’ you refer to would do nothing in your theme unless you do it properly. Nor would changing it.
that refers to the text domain…you can see this in twentyten’s functions.php
// Make theme available for translation
// Translations can be filed in the /languages/ directory
load_theme_textdomain( 'twentyten', TEMPLATEPATH . '/languages' );
it is the textdomain for being able to translate the theme. In your example code it is so that the word Page can be translated to the user language
http://codex.wordpress.org/Function_Reference/load_theme_textdomain
http://codex.wordpress.org/I18n_for_WordPress_Developers
For personal themes you will never release, it’s not necessarily so important. But it’s great to learn how to use. And its necessary if you ever plan to release a theme