...and you can use the built-in mic on the Apple headset as your mic
Re Audio in:
I thought the Mac would adjust itself to the input?
similar to the headphone / line out / digital out adjusts to whatever it is feeding
No, the mini is line-level input only.
http://www.apple.com/macmini/specs.html
Audio line in minijack (digital/analog)
Line-level inputs "work" with headphone/speaker outputs most of the time with no conversion. But not the other way round. Non-powered microphones have even less voltage than line-level, which is why you need an amplifier for the microphone, unless it's specifically a "mic input".
Think of it this way: headphone jack = loud. Line-level jack = soft. Mic jack = really soft. If the source is louder than the destination, it will usually work. (e.g.: iPod headphone jack sending to line-level in of Mac Mini.) But not the other way round. (e.g.: line-level out of a VCR will NOT drive headphones.)
There are a few Macs with "mic in" like the Macbook Air. That one has a single jack for both mic and headphones rather than separate jacks. Apple did that to save space and also made it compatible with the iPhone-style headsets. But the rest of the Macs are line-level in.