Steeping Grains?

When steeping grains pre-boil, are sugars extracted from the grain or is this step only for flavor/color.

When formulating a recipe you take the steeped grains into account to figure the final gravity.
I think the number is approx. 1.016 for 1 pound in one gallon. Does this imply that you are extracting sugars?

Yes--you do extract some sugars, but I think your figures are a little high.

Crystal malts (the most typical steeping grains) run in the 33-35 points per pound per gallon range. And I usually figure about 40% efficiency of extracting sugars in a grain steep. So that would be more like 13 or 14 gravity points per pound per gallon.

So with typical grain amounts in an extract + grains recipe, you're probably only adding a couple gravity points with the grains (and that is largely unfermentable sugars).