ok, I get to a bench, and I can create plasma ammo by recycling it, where does it come from? I pick up empty packs, but when they get refilled what is refilling them, same with flamer fuel. what is it that gets recycled?

I think what your doing is taking lots of drained but not completely empty batteries and transferign whats left into one fully charged battery. (check the pipboy Icon for vigilant recycler)
http://images2.wikia.nocookie.net/__cb20101126164002/fallout/images/1/1d/Vigilant_Recycler.png