You can switch between playing whichever Sim you like, whether they are created by the player or existing "neighbors" that came with the game.
You only create one playable character: yourself. The game obviously starts without neighbors. You get visitors randomly generated by the game, and if you think he would be a valuable asset to the town (in terms of their skills and personality), it's your task to convince them to settle in. From that point on, the only control you have over them is trying to influencing them.
To build or buy items, you open up a panel, select the item you want and magically place it in the game world.
You still open a panel to select items, but you actually select blueprints. To build a wooden wall, you place the blueprint and, provided you have the necessary materials (wooden planks for example), you put your building skill to use, and... build it. Building takes too long? Have a skilled builder move into town. On the other hand, for items quite impossible to build (like computers), you have to order them to be shipped to you, or have a shop built to your town that stock these items (by influencing the shop owner what items to stock).
You can redesign your neighbors' homes with complete freedom.
The neighbors build their homes by themselves (or by hiring an architect and/or a builder if available) on an area you designate for them (think residential/commercial zoning from SimCity). The building process will be procedurally generated, according to their personality, like painting the walls with their favorite colors or whether they like spacey or small and efficient rooms. It will be interesting to see what is being built (I realize this will be a difficult undertaking...). There could still be a way to make modifications though, such as to iron out any imperfections.