First of all, can someone please explain to exactly what a sequencer is CAPABLE of? Should I go with a hardware or software type? And how would I go about using it??
A sequencer can record MIDI info. That is the simple answer.
I don't feel like conducting a tutorial online, what you should get depends on your needs. I like hardware so I use the Yamaha QY70.
Here are some links that should give you a better understanding of sequencers.
I don't know if you are familiar with it but I currently own the Moog Opus 3 Synthesizer, and I was wondering if something like this would be compatible to a sequencer? If not, are there any ways I can make it compatible to an external one?? So, with a sequencer, I could edit the instruments and then connect the sequencer to the digital recorder, and record it??
If it has a MIDI in and out it is compatible. With a sequencer you can edit the instruments, tempo, quantization, note lengths...and jsut about anything else you can think of. Then, when it's just right you can record it into whatever you use to record. In fact you can synch up your (digital) recorder with a sequencer easily.