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Small amp big sound

I have heard again and again that you can get a big sound out of a small amp. I don't really understand how this is possible, and was wondering if someone could expain this phenomenon.
I am after a Guns&Roses (Appetite for destruction) kind of sound. Or a Lynyrd Skynyrd (That Smell) sound. Can I get this with a fender champ or little danelectr?

Help setting up a small basic studio

I've got about $3500 to use to set up a recording system for the music department at our local (small) high school. There are so many choices that I'm totally confused. I want to record live performances, usually either vocalist with piano or rehearsals of the choirs and bands, and save them on CD's that can be played on any standard audio CD player.