Can shape and build my own islands?

Can I design my own towns and cities and forts?

Can I create my own personal NPC's to live in those places?

If so, where do I start!?!?!

Well, I have made an islanda bout half the size of Solstheim...
So...
YES, YOU CAN.*insert obamicon here*

Woah... what the [censored]?

I bought Morrowind GotY Edition off of Steam and it did not come with Construction Set!?!?!?!?

Not only that, I can download the fix over at TESNexus, but I got to pay $1?

What the [censored] is this [censored]?

Yeah, that's an unfortunate oversight on Valve's part that has yet to be fixed, as far as I know.

The CS is available for download here http://morrowind.nexusmods.com/mods/42196 and it should be free. You may have to create an account with the Nexus, but that's free as well. They're not allowed to charge you to download mods.

Yes to all your questions.
The best place to start is http://tamriel-rebuilt.org/?p=modding_data/tuts/dsong/first_room - It will explain all the basics.
The TR site has a large http://tamriel-rebuilt.org/?p=modding_data/tutorials
Try the http://www.gamesas.com/topic/24-comprehensive-tutorial-and-useful-link-list/ for more links.

The CS might seem confusing at first, but it's actually very simple once you get the hang of it.