A toplist is just a list, the more traffic you send the higher up you should rank. How you rank depends on what you send compared to the other sites. You have to send traffic to stay on the list. They ask you to pick a username/pass so you have your own account, and have stats, like how much you've sent, how much was sent to you, ect. Thats how most work anyways. Yes, you can only have one site per account, have to get another account to add another site. And yes they give you a special link, have to to, so you get credit for the hits you send.
Where you put the toplist link on your site is of course up to you, the more visible you make it, the more you should send to the toplist, then again, less clicks for your ads. It's kinda of a catch 22. Most people use them as a last resort, like on exit consoles, as they know the surfer is leaving without buying anyways. Course you cant do that on a free site or tgp.
Hope that helps or has'nt confused you more...
ronnie