re: Could someone explain the Cavs cap situation

No. A team can only go over the cap to re-sign their own players.

So a team that doesn't have cap space cannot just go sign a max player in free agency and pay the luxury tax. That's not how it works.

The Cavs can go over the cap to sign Love and LeBron since they are their own players.

For example, let's say the cap is set at 70 million and the tax is 90 million. A team that was at 70 million the year before re-signs some of their players this summer and now has a payroll of 80 million. They don't have to pay the tax but they are over the cap.

Imagine a team was over the cap at 80 million, and one of their players broke out to become a star. His contract is up, and he's commanding 15 million more than you paid him the year before. You are allowed to re-sign him, but that will bring your payroll to 95 million, bringing you 5 million over the luxury tax line.