Insteon switches are basically simple computers in light switch form factors. Therefore the switch itself needs to have continuous power so you can query it, send it commands, etc. That's why you need neutrals in the switch location - the hot and neutral supplies power to the switch itself. The red wire is what you use to connect to the load (i.e. the light). That one is controlled by the switch and can be toggled on, off, dimmed, etc.
As for your staircase switches, those would be a 3-way switch configuration. In that configuration the wiring with red wire is used to connect the two switches together. See here for some diagrams that show you how these work:
http://www.ezdiyelectricity.com/?page_id=381
With an Insteon setup you no longer need the wire connecting the two switches. What you do is wire one switch to the location that connects to the light as you would a regular single switch. In the other switch location you install another Insteon switch but you only connect the black and white wires and cap off the red (load) wire. Then you link the two switches together so the second switch controls the first and vice versa. That way they are always in sync. e.g. When you turn the light on the one switch the other switch comes "on" automatically too.
BTW, you can use Insteon switches for CFLs as well but you need a different type of switch. They call it the "On/Off" switch (I guess the marketing folks weren't feeling particularly creative that day).