I know what a complex number is: $a+bi$. But I have seen these functions that make no sense to me, something such as this: $$f(z)=z^2+1$$ where $z$ is a complex number.
Does this have to do with that plane where the "y"-axis is Real numbers and the "x"-axis is Imaginary numbers? I typed it into this complex grapher http://davidbau.com/conformal/#z%5E2%2B1 and I am utterly confused. What's with all the colors? What's with that weird 8 shape?

One way to imagine a map $f : D \rightarrow \mathbb{C}$ with $D \subseteq \mathbb{C}$ is to think of it as a 2-dimensional vector field. Remember that $\mathbb{C}$ is just the vector space $\mathbb{R}^{2}$ equipped with a special multiplication
$$ * : \ \mathbb{R}^2 \times \mathbb{R}^2 \rightarrow \mathbb{R}^2 $$ $$(v_1,v_2)*(w_1,w_2) = (v_1w_1-v_2w_2,v_1w_2+v_2w_1)$$
that makes $(\mathbb{R}^2,+,*)$ a field. The imaginary unit $i$ is not some magical object, but just a notational symbol to simplifly the practical use of the above multiplication. Therefore $f$ just maps a set $D\subseteq \mathbb{R}^2$ into the $\mathbb{R}^2$. For every vector $v \in D$ you can visualize $f$ by mentally attaching $f(v)$ to $v$. If you would plot this, you would get a cohort of arrows in the plane, all starting somewhere in $D$.