As mentioned, Lightroom's main function is image database (catalog) management. Since Lightroom is only capable of opening 1 image database (catalog) at a time, you need to put all of your images into a single catalog. However, you can organize that catalog into collections.
Lightroom is very good for adding keywords and image ratings to images during image ingestion, because keywords and ratings are what make the database search feature effective. Lightroom was designed for working photographers that routinely produce
a lot of images. Lightroom was designed as a compliment to Photoshop CS. Adobe expected Lightroom buyers would already have Photoshop CS, rather than use Lightroom as their only image editing application.
If one does not spend the time and effort to keyword/rate images as they are uploaded, Lightroom's main function becomes virtually useless.
It doesn't make a lot of sense to pay for software and then ignore it's primary use.
Lightroom's Develope module uses Adobe Camera Raw (ACR). Lightroom' Develope module is a Raw converter. While Lightroom can edit JPEGs, JPEGs only have an 8-bit color depth leaving little, if any, editing headroom regardless the image editing application used. Elements or CS5 would have the same limitations when trying to edit JPEGs.
Photoshop Elements 10 is the consumer version of Photoshop. Elements includes an image organizer (an image browser), and a truncated version of ACR. Elements can edit pixels, has layers, selection tools and functions, masking, and many other features needed to do graphic arts type things like make posters, cards, albums, add textures, etc.
Photoshop CS5 also includes Bridge (an image browser), and virtually the same ACR that Lightroom 3 has in it's Develope module. CS5 has even more tools, features, and functions than Elements does.
You may find some of these tutorials helpful:
Photo Editing Tutorials