Sorry for the noob question, but obviously I am new to all of this.

I have used Rhino3d, and am thinking about purchasing it when I get my first cnc mill (I am a teacher, so it is only $195.. not $995, lol)

I guess I always figured it all worked through 'magic', but I keep reading that people use 1 software for CAD work, and another for CAM work, then a third to send it to the machine.

So what is the difference between CAD and CAM? Is CAM determining tool paths and stuff?

I thought I could just design the part, then have another program send it to the machine, but I guess I am missing a step.

CAD is drawing or modeling the parts. (Rhino)
CAM creates toolpaths and g-code from the CAD files.
The Machine Control reads the g-code and controls the machine.

CAD is drawing or modeling the parts. (Rhino)
CAM creates toolpaths and g-code from the CAD files.
The Machine Control reads the g-code and controls the machine.

OK.. that makes sense.. I forgot about those G and M codes, I had to write a bunch of that in college.

So how much manual work is done in a CAM program and how much does it automatically figure out? I assume you have to tell it some basic info, and it figures out the paths and codes on its own?

Probably depends on the complexity of the project, as well as the particular CAM package you're using. Can be as little as a few mouse clicks.