Creating a product is not straight forward for the first product. If you plan on creating a large amount of products and product types you will find that this process will help you a lot. It might be easiest to create populate script to do this automatically. You might want to add a custom script.
A property is something like Color, Size, Weight, Flavor. You will be able to add specifics to the properties when you create the product variants. Don't create a property of red or 16oz, just do Color and Weight and add specifics when you create the variants.
A prototype is something like Shoe or Clothes. Again try not to be very specific at this point. This can easy to creation of product properties if you choose not to use the wizard setup when you create a product.
Product Types intent is to allow categorizing products. The intent will be have breadcrumbs and sub categories. So you might have a product type of Shoes => Sport Shoes => running shoes. You would give a running shoe the running shoe type but searching under sports shoes or just 'Shoes' will have the running shoe. So now you have a product type categorization.
When you create the product you will see that this is where you will add 16oz to weight and Red to the color property. Also once you select a prototype the property list will reduce. When you have a lot of properties for many types of products this will help you a lot.
A preferred approach to creating prototypes is to use the product wizard. Thus you will have a multi-step form that you enter information into. This reduces the complexity of creating a prototype.
A variant is a specific type of product. If you have a "shoe" prototype, the product might be Air Jordan's, then variant could be size 9.5. Thus you can sell each variant(size) of the shoe.
To add a variant you must first add a product. Then click on the product in the admin grid to edit it. You will see the Add Variant button here.
To add an image you must first add a product. Then click on the product in the admin grid to edit it. You will see the Add Variant button here.