I had an addition built onto my house a while back, a granny flat for my mother to live in. This 500 sq ft addition has multiple rooms (bedroom, bathroom, kitchen/living room) and a separate heating and A/C system (separate from the original house). I believe it is called a heat pump, but I'm not sure how it works or what the function of each component is.

The components include an armstrong unit outside the house, Model 2SH31PLE118P-1, and this unit looks just like the A/C that I have for the original structure. There is also a Heater Sofit Fan Coil, Model 19 HXO-C, located in the ceiling of the bedroom closet. There is an access cover in the ceiling and when I opened it the unit itself is covered by sheet metal so I can't really see it without quite a bit of effort. Additionally there is the thermostat, Ultrastat by Honeywell, the markings on the back of this unit include "T8001C 1217(C), 0417 2A".
The addition does have ducting, including an intake duct in the kitchen.

The system seems to be working fine, but it seems to cycle a lot more frequently than my standard heating and A/C system in my house. When the heater is on the blower cycles every 5 to 10 minutes and the air coming out of the vents seems to be cool, not warm like the air from the gas heater in my house. The air does warm the apartment down though so I'm somewhat baffled by how that works.

Anyway, if anyone could, without laughing at me, tell me how this system works and if there is anything that i should be aware of I would appreciate it. Is this a decent system as far as efficiency and energy savings?
Thanks
Steve