At this point, you probably have a working understanding of what bitcoins are (at the very least your handle of bitcoins is like how you can kinda, sorta explain why the sky is blue to a kid). But how does an actual transaction with bitcoins work? That's a bit more complicated. It's not exactly pulling crumpled cash out your pocket and dropping it off at the bodega counter for a soda now is it?
There are a lot of steps in a bitcoin transactions that involves wallets, addresses, verification, cryptography, a whole lotta computer brain power and a bunch of other terms you don't always equate to spending moolah.
Here's how it works (and you should click Expand to get all the nitty gritty):