Maybe I am repeating some information already posted but:
- Sound originates from the 'device'. Typically, a DVD/Blu Ray/CD player, DirecTV box, Roku box etc. The TV itself can originate sound if you have hooked up an antenna and don't get feed from any cable/DTV boxes
- I would highly recommend a discreet system and not a hybrid. You can create a combination for a wide range of budgets. Key always is to first decide on a budget.
- I haven't played with soundbars much but don't have a favorable opinion of them. Get a true system to experience surround sound. Frankly, there is nothing like having 5 separate speakers + 1 sub woofer for true surround sound. Everything else is just make believe
- Don't buy Bose
- Depending on how much effort (time) you want to spend on your searches, this is an excellent source of information and discussion:
http://www.avsforum.com/
Basics are explained here: http://www.avsforum.com/t/968859/avr-faq
- Analog output can originate from a DVD/Blu Ray player where the separation of channels is done at source. Six separate wires go from this device to your receiver. The receiver does minimal to zero processing of sound
Lot more to explain if you have specific questions. Good luck and do spend some extra time researching - it is very rewarding and will give you years of listening pleasure