Quote - I'm not really getting what the normal map is actually doing, other then what we used bump maps for for years.

If looked upon from high above, they do exactly the same as the greyscale bump maps you used for years; they both affect the normal of your surface, only in different ways.

Quote -   I kind of expected what we see in video game normal mapping effects, and thats clearly not the case at all.

What effects do you mean, do you have an example? Perhaps it is not normal mapping you are trying  to achieve !?