Basically yes. The system is more or less a combination of WoW enchanting and jewelcrafting, with a dash of silly-Asian-tedium tossed into the mix. You can't socket materia unless you have a certain skill level in the tradeskill associated with that piece of armor, you have to equip and use a junk item for a few hours in order to max out your spiritbond with it before you extract materia from it.
Bottom line, avoid items with materia sockets like the plague while you level, and don't even think about messing with the system until you're 50. Materia sockets come out of the stat budget and it's pretty unlikely you'll be filling the sockets with stats that are better than what you'd get from a socketless item.
Also, on the topic of loot and for people new to the game, green is better than pink*. It's certainly not intuitive to anyone who's ever played, well, pretty much any other game ever made that uses colored names for loot quality, and I don't think the game ever comes out and explains it.
*-Usually. Pink gear is randomized, and it's possible to get an exceptionally good item with a bunch of stats on it that ends up better than the same ilvl green.