All of the modifications should be done via plugins. If you want to know why, read through: http://docs.elgg.org/wiki/Dont_Modify_Core

If you want to learn about creating plugins, that's a good start: http://learn.elgg.org/en/1.x/tutorials/index.html, than have a look at: http://docs.elgg.org/wiki/Engine/Views

OMG, just plugins can modify? =O

Yes, and you can do almost anything with them - that's part of the design.

You're legally free to modify whatever you want, in case that wasn't clear.

It's not "you can modify Elgg ONLY by plugins" but rather "you SHOULD NOT modify Elgg core files but change the functionality / look / add new stuff by creating a plugin."

You can change almost anything via a plugin and keeping the core files unchanged is not only safer regardiing upgrading Elgg core (no risk of losing your modifications) but it's also much easier to manage if you know your changes are only in your custom plugins.

If you understand how to override or extend views of Elgg core by a plugin (see links posted by Pawel), you have already the basic knowledge of how to make some simple modifications for example of to adjust the look via CSS changes.

You also have to keep in mind that the HTML output you see as source in the browser is not exactly to be found in any source file of Elgg. It's not only HTML code after all but php and JS, too. To find the "view" where the code is you might have to modify to change a page element, you can enable the "wrap views" development setting. Then you see the name of the views where the output is created as comments in the source in the browser. But you should first get at least some basic knowledge (by reading the tutorials on docs.elgg.org and learn.elgg.org) to know what you are doing or at least how to start.