You can create a page based site if you wish. You can create static pages, create a custom menu and add the pages to it if you wish. Or you can have a static front page.
Pages are static and are for content that rarely changes. They sit outside of the blog structure and you cannot post to multiple pages in any blog. There is only one main page for posts in a blog and all posts will display on the main blog page. There is no way to exclude posts from the main posts (blog) page.
The front page of the blog by default will display your posts (not pages) in reverse chronological order, with the most recently published post on top. If you do not want all the posts to show on the front page, then you can create a static front page "Welcome" for your site and a “Blog” page for posts.
Choice 1 static front page
Choice 2 running page for all posts on front page
Which do you choose? It’s one or the other.
If you choose Choice 1 static front page then you have to create two pages as I said above. After you do that you go to > Settings > Reading and make the designation change and click “save changes”.
You may want to read Better Blogging at WordPress.com: Pages and Posts so you are clear on the differences between pages and posts, and the consequences of choosing to have a page based site with a static front page when it comes to search engine ranking.
We organize our posts by assigning Categories to them. When we publish a post it automatically appears on the running page for posts and also on the Categories pages and Archives pages. Note: There must be one published post in each Category in order for there to be anything to display.
A custom menu allows you to display Categories with drop-downs to sub-categories in tabs along the horizontal navigation where normally only Pages tabs are displayed. If you wish you can also include Pages with drop-downs to sub-pages and/or custom links in your custom menu as well. You are in charge of what appears in a custom menu. You choose the order in which to display any and/or all the foregoing in your custom menu. You choose which to display and which to hide.
Please see: custom menu > http://en.support.wordpress.com/menus/
custom menu walkthrough > http://onecoolsitebloggingtips.com/2011/08/11/wordpress-com-custom-menu-walk-through/
There are many common errors, misunderstanding and misconceptions when creating custom menus and you can read about them here > http://wpbtips.wordpress.com/2011/12/19/custom-menus/