Anarchism

Could anyone give me a straight answer as to how a self ruling state or country would operate?  Sounds to me like its just Democracy without figureheads.  How would they create laws and decide on issues?

As well, could anyone explain the difference between anarchy and socialism?

>>2
So for instance if I formed a gang and went around threatenning to shoot people unless they give me money, that would be fine in an anarchy?

What if I decided to join forces with other gangs and become a figurehead for their activities and take over non-compliant gangs? Would that be fine too? What if I conquer and expand and declare myself, "normal average person who happens to have control over everyone in a 50 miles radius". Would that be fine with anarchy?