I just bought the M&M pack and started playing M&M3 again. Last time I played it was 15 years ago when I was in elementary school. Is there anywhere that I can read up on the interface? In particular... what the heck are those gem things under the character's portraits? I get that they show the HP/status of a character, as in when you are hurt it turns from green to yellow, but what does it mean when it is grey? Is there anywhere I can read up on basic info like that? I looked through the manual and it doesn't really explain anything.

Manual doesn't explain anything, but there should be a Reference Card you can download that explains it all.
Since I own a physical copy of the game I haven't bought it from GOG, so I can't check, but I'd be very surprised if the RC was not available for download.

Ah cool I will check that out.

Also how does one exchange items between characters?

Silver means you have more health than your normal maximum.

To trade items, select the item and either click on a portrait or press F1-F6.

Got it thanks.

Here is a page that has all the info on interface that the manual should have had:
http://shrines.rpgclassics.com/pc/mm3/general.shtml