Hi Paula,

You won't be the first person to be confused. To put it simply - folks currently termed "Melungeon" are of mixed racial heritage - descended from those who in order not to be labelled black or mulatto (I don't mean half-and-half by that, I just mean light-skinned African-American) and so they didn't have to attend segregated schools - removed themselves into relatively isolated communities.
Some have Native-American ancestry as well but the stories online about them being long lost descendents of Phonecian sailors or other such mythology is just that - myth.

If you trace the history of just one family - see Irita's history of her GOINS/GOINGS/GOWANS family line at:
http://familytreemaker.genealogy.com/users/c/a/n/Irita-E-Canady-MI/?Welcome=1075926430

which has lots of pictures, and then go back earlier on Paul Heinegg's website:
http://www.freeafricanamericans.com/Gibson_Gowen.htm

you will see how families with some African ancestry - mixed with European and perhaps Native American were free from a very early period - and as they moved away from VA to other areas - some disappeared and became "white", others remained mulatto, colored or Negro and intermarried with other's who remain part of the African-American community to this day, and still other's have termed themselves "Melungeon". The term "mestizo" or "tri-racial isolates" is also applied to the folks in these groups.

Denise