Hey there,
I decided to make a video for my question, so that it is easier to explain and understand. Please leave help or advice here, not on the video comments.
Hi,
I didn’t watch your whole video but if i understood correctly you want to know how does Subdivision Surface modifier works, is that right?
Check this video: Blender 3D Modeling Basics Part 7: Subdivision Surface Modifier
I did not understand at all, maybe add a ref pic to illustrate what you want to achieve, also maybe upload your blend file for people to have a look at.
Where you are getting those "sharp transitions, I would go into wire mode, select the points, (if it’s and edge loop, just select that), the manually move the points to refine the curve. If the item isn’t axis aligned, try using the normal / local co-ords to do this. Yeah, it may “suck”, but that sort of refinement just has to be done at times. Re: “Smooth” shading, the first thing you must do after tha, go to the geometry tab and activate AutoSmooth. You can then tweak the angle to get rid of that “pillow” effect, this I think is often overlooked, I know I didn’t use it when I first started and got frustrated by the pillow effect. Your editing, there are few basics you’re missing, With edge loops, they want to conform to current edge structures, when you create them, you have the option to toggle this between edges. Edge/vertex slide, (gg), is your friend in many situations. It seems you are overthinking things, which to be honest, I do a lot, get some time spent of a few tools and these sort of niggles will just vanish. I do understand your frustration, but a lot are “oh, is that it?” situations, once learned, remain in the toolbox. 
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