CSS files can be edited out-of-system, and placed in the css folder, umbraco will see them. Older versions of umbraco split CSS between files and database, but no longer.
You can create CSS in the usual manner, but umbraco also provides a UI which can be helpful at times. Right-click on your CSS file to create a new style. In the Developer section, in the Data Types branch, select Richtext editor. Here you can associate CSS files with the WYSISWYG, and rules created with umbraco GUI will be visible. These rules have entries ion the database (I think) for the "Name" and "Alias", but the actual styling is done in the CSS file, below the line:
/* EDITOR PROPERTIES - PLEASE DON'T DELETE THIS LINE TO AVOID DUPLICATE PROPERTIES */
Don't add rules below the line without using the umbraco GUI, Right-Click, context-menu approach to get a coressponding entry in database, but you can edit the CSS after it has been created.
If you use the GUI, you can set site constants, such as h1 size, and so on. When styling a tag, use the tag (ol, li, a, h1, etc.) as the alias. When creating a style to be used in the editor, include the preceeding "." for a class, or "#" for an id in the alias along with the custom class or id name.