You are a very intelligent newbie, you answered your own question. It’s about the blood. And what is the carrier of blood? That’s right, your vascular system. When you squeeze the end of a balloon it increases in length and girth at the opposite end, the reason it increases in size is the additional pressure which increases expansion (or volume) to the opposite side. Now, think of the balloon as an artery or vein in your penis; if you can get that blood carrying hose to hold more blood you will increase the size of your penis.
This is why enlarging your member is a slow process, it takes time to make permanent changes to your vascular physiology; after all, your dealing with a network of hoses that will strongly resist expansion (but not too strongly with a disciplined approach). So, the idea is to create a larger volume of blood with the same pump that has always been in the system; to do this requires larger pipes. Guys with large cocks have veins that are 3x the capacity of those born with average pipes.
I would not worry about your flaccid size, if your small to begin with you probably will stay small (thats just the nature of it). It is erect size that you can dramatically change. Although if flaccid size is important, you can fluff yourself in the stall and come out sporting what appears to be a fine, healthy swollen penis (but you cheated).
There is a lot of unused capacity in your Johnson, you just have to go after it. Girth gains come from increased blood volume and length gains will come from bringing out your so called “inner penis” through stretching and hanging routines.
Once you get to a certain level in your PE gains you will hit new obstacles that are even more difficult to surpass. Take your balloon and insert it in a cylindrical cardboard tube, now start blowing it up. How far can you blow it up? Only until it expands as far as the cardboard tube will let it. Thats what your vascular system is running up against; it can only get so big and then there is another hurdle. There is a sleeve in your penis much like the cardboard tube and it’s resistance to expansion is much greater than the walls of your arterioles, so you must modify your techniques to squeeze out very tiny future gains.