It instantly syncs contacts, calendars, reminders, notes, email, bookmarks wirelessly between all your iOS5 devices, the icloud.com website, and your computers.
when i go to the icloud website i only see the contacts in there,
Have you enabled calendar syncing?
isn't it supposed to back up my bookmarks and stuff too?
No. It will sync your bookmarks between computers and iOS devices, but your bookmarks are not visible at icloud.com
how do i get stuff off of icloud onto my phone if i wanted to?
If you've setup syncing, it does it automatically.
It will automatically sync iTunes Store purchases made anywhere to all other devices/computers wirelessly, if you have that option setup in iTunes and on your devices.
You need to keep your music in iTunes too, as a backup. If you lose your phone, you've lost all your non-iTunes Store purchased music, if you don't back it up.
Yes, iCloud allows you to use iOS devices without connecting to a computer to sync all the time.