I searched the forums so maybe i suck or there are no questions like this but I was wonder what the capabilities are with this game engine. I know nothing about game engines and wasn’t sure if you needed other software as well or does blender come with everything you need? By capabilities I mean how advanced of a game can you make?
Compared to most programs, blender is not as powerful. It also lacks real-time Shadows and advance lighting by default. It may not be as powerful as most game engines but I have gotten it to run over 50,000 polys and a great deal of programming with a good frame rate, so you can’t really call Blender weak.
By capabilities I mean how advanced of a game can you make?
Well, you can make big games but, just like any game engine, you have to have determination.
By capabilities I mean how advanced of a game can you make?
it depends on you really , you need to learn a bit about game development before you can use any game engine really.
For High-end games I suggest Crystalspace. It will save you a lot of time re-inventing the wheel for simple things such as Terrains .
Right away you can use the Parallax shaders without even knowing how to program 
they have a bunch of other things, and I am too lazy to type right now.
Go here for the blender2Crystal plugin :
http://b2cs.delcorp.org/index.php/ArtistInstall
and here is the crystal space main engine:
http://www.crystalspace3d.org/main/Main_Page
Blender game engine is a great place to start out, you can do a bunch of things without coding using logic bricks. But is quite limited in other ways such as real time shadows, and most of the nice shaders you will need to learn GLSL .
I use blender game engine for prototyping and pretty soon here I plan on doing a small game with it.
To learn some basics about game development try this :
http://gamedev.sourceforge.net/
Scrolling game development kit has some great tutorials to get you started in game making. all of what you learn can be applied to a 3d engine.
The famous game academy Guild Hall uses SGDK for some of their basic courses.
Lots of people also learn from non-free games like unreal.2003,2004, Halflife 2, and any of the Doom 3 based games.They all have great editors,and some nice community tutorials.
If you are new to programming dont f#ck around with scripting languages (especially BASIC, or Pascal) , try to learn C if you can. If you start with any other language, it will make it very difficult to understand what is going on.(not to mention all the time you will waste re-learning everything).
For C I recommend a course in your local collage. There are plenty of great tutorials on the internet too, and many people do teach themselves.
If your learn the pearls of C, the game development world will be your oyster. You will be able to use any game engine you want. Or you can just make your own 
Here is another fun one for beginners :
http://www.sauerbraten.org/
Sauerbraten will let you make your own game maps in real time! just press E and you are in edit mode.
Lots of fun for the newbie , and will teach you about general level design .
It is a 3d shooter right now you can even play online! they even have a Co-Op edit mode where you and your friends can build a map together online in real time. then with the press of a button, you guys can run around and shoot each other.
buried in Sauerbraten is an RPG game that they are working on, in the forums you can learn about the scripting they are using.
anyways, all for free!
have fun
imho: Nuff to get you started. The GLSL shader abilities alone keep me busy for a while. Until i have learned the existing features it will have already advanced more. More things to learn. Before you and me can fully use the now existing blender features it will have the abilities of a present AAA- engine. My recommendation: Just get going.