Thanks... (in other words, how does the crystal do it's job and what are the role of the caps, i've googled it, it just made it worse)
There are tons of reference works on how crystal oscillators work. An oscillator is simply an amplifier with positive feedback applied from it's output to it's input. The amplifier portion is internal to the AVR chip. If one uses a series crystal in the feedback path of the amplifier, then positive feedback voltage will only be applied at the specific resonance frequency of the specific crystal being used, forcing the amplifier to oscillate at only the frequency of the crystal. The frequency that a specific crystal is resonate at is determined mostly by it's physical properties (thickness, cut type) but also the circuit capacitive it is wired into. The external padding caps used with a crystal is a designers attempt to match the 'load capacitance' that the crystal was designed to work at to give the specific frequency the crystal was designed for. Change the caps slightly and the frequency of the circuit will change slightly, remove the padding caps altogether and the oscillator may still continue to function but just at a frequency somewhat removed from the marked frequency of the crystal. The manufacture of the crystal defines (in it's datasheet) what 'load capacitance' the crystal was designed to work at to meet the frequency +/- tolerance marked on the crystal.
lefty