Think of MagicBands as keys. They open up a box of stuff. The box is your account on MyDisneyExperience.
Everything is linked to the box - your resort reservations, tickets, Advance Dining Reservations, dining plan credits, FastPass+ selections, Memory Maker entitlements, and your PhotoPass account.
Your MagicBand is also linked to your account, which enables it to access anything in the account. If you have a ticket in your account, you can scan your MagicBand at the gate to get into the parks. If you have made advance FastPass selections, you scan your MagicBand to enter the FP queue (and it knows if you're too early or too late and won't let you in). If you have purchased one of the Disney Dining Plans, you scan your MagicBand to a payment device in restaurants and eateries to use the credits. You can also link a credit card to your account, and use your MagicBand to charge purchases on WDW property (but only if you're staying at a WDW resort - it's what we used to call Room Charging).
To prevent fraud, you have to go into your MDX account in advance (or do it at resort check-in) and set a 4-digit PIN, much like you do with an ATM card. You enter the PIN any time you use a Dining Plan credit or make a purchase.
Since MagicBands are just fancy keys, you can have duplicates. There is no limit to how many MagicBands can be linked to your account - but only a maximum of ten (per person) can be active at any given time. If you have multiple resort stays, or split stays, or you buy some of the imprinted MagicBands in the parks, you can just keep adding more of them to your account and wear whichever one strikes your fancy on any particular day. I currently have four. Eventually I'll get all of the different solid colors, and I might spring for an imprinted one some time if I see one that I really like. They make nice Christmas tree ornaments.
And since they're just fancy keys, nothing is actually stored on the MagicBands themselves. No personal info, tickets, entitlements or anything else is stored on the MagicBands - it's all in your Disney Account. In other words, your tickets, entitlements, reservations, etc. are not linked to or loaded on your MagicBands - they are loaded into your Disney account, and your MagicBand opens the account for you. So if you buy a new MagicBand, all you have to do is link it to your Disney account, and it will instantly be able to access everything in your account.
Like the old Key to the World cards, MagicBands can be deactivated if lost or stolen.
I hope that's helpful.