Well... there isn't a "help for VC games" subforum so I'll use this:

I like sonic as a game, not as a character. So I downloaded Sonic 3. I thought it was a simple platformer and such, only to find out that I get murdered by monsters, one hit gets rid of ALL my rings, and that freakin' underwater timer (the song is pretty catchy though).

And I go on youtube and watch people play and I stare at the TV (youtube on wii ) going, WTF?

Any tips on how to play this fun, yet strangely hard game would be appreciated.

oh, the first bonus stage I went into, I didn't get any blue dots and it took me 2 seconds to hit a red dot

Hard? I find it quite easy, although I did grow up playing the series.

Best advice: try to have at least one ring at all times. If you get hit, you'll lose them all, so try to grab a few back before they disappear. And I must admit the Sonic series has a strange fondness for including underwater sections (every level bar one in Sonic 3 has water in it! ). You have to jump into the giant bubbles to prevent drowning.

yeah but in Act one, I fell in a pit of water with no air bubbles, and also no way to get out. Not even the down+1 (or 2) couldn't get me out...

Hmm.. I presume you're referring to Angel Island Zone, in which case I don't think there's any pit of water from which you can't get out. Try looking for springs, platforms that disappear then reappear, or hidden passages.

When you get hit, you get the chance to get back the number of rings you lost as long as the number isnt greater than 20, in which case you only get 20.
There is no pool of water in which you cant get out of, BTW. There is always a way as long as you move fast.
I've been playing it since it came out. I can beat Sonic 2 in 40 minutes and Sonic 3 in something like an hour. It's not hard as long as you can sink you're teeth in it eventually.
Where are you now?

2nd act, the stage after the 1st one...

I drowned there 3 times waiting for the big bubble to come out X_X;;

Hydro City? Stick above ground if you have trouble with air. At the beginning (after initially going through the underwater tunnel) there is a small ledge with a hidden spring to indirectly take you to high ground.