Heather's given you some good advice about how it works.
Here is the calculation page, where you can see how your food range is calculated based on your goals: www.sparkpeople.com/resource/calorie_calcu
I'm a bit concerned that you seem to think 1200 calories (plus eating back 400 of exercise) would maintain your weight. It's unlikely that 1600 calories would maintain anybodye's weight.
Here's an exercise in fun - go through the calculation on that page and when you get to weight loss goal set 0 - none - maintaining. See what range you end up with.
And yes, it's very important to eat ENOUGH. Your 1200 isn't your maximum - it's your minimum and you MUST exceed that every single day for best health.